Income Tax Appellate Tribunal - Delhi
M.L. Saini,, vs Acit, Range-Ii,, on 22 October, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH: 'E': NEW DELHI)
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
IT(SS)A No:- 228/Del/2004
(Assessment Year: 1.04.89 to 12.03.99)
Sh. M.L. Saini, ACIT ,
3E /88, NIT, Vs Investigation Circle
Faridabad Faridabad.
PAN
APPELLANT RESPONDENT
IT(SS)A No:- 207/Del/2004
(Assessment Year: 1.04.89 to 12.03.99)
Asstt. Commissioner of Sh. Madan Lal Saini,
Income Tax, Vs 3E /88, NIT,
Range-II, Faridabad.
Faridabad.
PAN
APPELLANT RESPONDENT
Assessee By : None
Revenue By : Smt. Parm ita M. Biswas
ORDER
PER ANADEE NATH MISSHRA, AM
(A) These cross appeals have been filed by the Assessee and Revenue respectively against impugned appellate order dated 31.03.2004 of learned Commissioner of Income Tax (Appeals), Faridabad [Ld. CIT(A)", for short]. For the sake of convenience this cross appeals are hereby disposed off through this consolidated order. First we take up Assessee's appeal in ITA No.228/Del/2004 . The grounds of appeal are as under:-
1. The learned CIT(A) erred on fa c ts a s w ell a s in la w in holding that:-
1. Search W arrant d a te d 1 0 .0 3 .1 9 9 9 w a s in the individual nam e o f the a sse sse e .
ii. The A s s is ta n t C om m issioner o f Incom e Tax investigation circle, h a d jurisdiction to p a s s Block A s s e s s m e n t Order u n d e r appeal.
iii. The notice u / s 158BC d a te d w a s a valid notice a n d in holding th a t the proceedings u n d e rta k e n o n th e b a sis o f su c h notice w ere also valid b y treating th e irregularities in th e notice a s minor.
iv. The B lock A s s e s s m e n t Order u n d e r appeal w a s p a s s e d w ith in th e lim itation p ro vid ed u / s 158E(1)(b). v. Compliance to the provisions o f section 158BD w a s not necessary.
vi. The provisions o f section 158BG h a d b een com plied with.
vii. Procedure laid d o w n u n d e r section 158B B h a s been follow ed.
viii. The provisions o f section 1 4 4 /1 4 5 o f Incom e Tax A ct 1961 w ere rightly applied.
ix. The requirem ents o f section 132(1) a n d o f 132(9A) w ere met.
x. The principles o f natural ju stic e h a d b een follow ed.
xi. Block A s s e s s m e n t fr a m e d w a s in d ep e n d en t o f in vestigation carried o n b y the DDIT (Investigation) a n d therefore w a s not b a s e d o n th e report o f the DDIT Investigations i.e. appraisal report.
2. The lea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f R s. 3 ,0 7 ,0 1 3 /- on accou n t o f C om m ission Income.
3. The lea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f R s. 6 ,7 7 ,7 8 1 /- a s profit.
4. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f R s. 1 5 ,0 0 0 /- a s a d v a n c e p a id .
5. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f R s. 1 5 ,0 0 0 / to w a r d s p a y m e n t o f A d v o c a te s fe e .
6. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f Rs. 4 ,5 9 5 /- on accou n t o f p u rc h a se o f a A q u a G uard w a te r purifier.
7. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f Rs. 6 ,9 7 ,5 0 0 / to w a r d s in v e stm e n t in la n d a t Pali.
8. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s in la w su sta in in g a d d itio n o f Rs. 2 ,2 3 ,5 0 0 /- on account o f p ro fit earn ed.
9. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f Rs. 3 ,4 9 ,4 8 2 / to w a r d s in v e stm e n t in B a d k h a l L an d a s u n d isc lo se d income.
10. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f Rs. 4 ,4 0 ,0 0 0 / to w a r d s in v e stm e n t in C ar L u cky D ra w Chits.
11. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w su sta in in g a d d itio n o f Rs. 5 ,2 5 ,0 0 0 / to w a r d s p a y m e n t o f in sta llm en ts on chits.
12. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w in not allow in g s e t-o ff o f th e a s s e s s e e 's claim w ith r e s p e c t to f u n d s a va ila b le w ith th e a s s e s s e e in th e fo rm o f loan s fro m variou s p e rso n s.
13. The L ea rn ed C om m ission er o f Incom e Tax (A ppeals) erred on f a c ts a s w e ll a s in la w in not allow in g a s s e s s e e 's claim fo r expen ditu re, in full.
14. The A s s e s s e e c ra v e s le a ve to a d d , a m e n d or d e le te a n y ground(s) o f a p p e a l. "
(B) A search and seizure operation was carried out at the residential and business premises of the assessee on 12.03.1999.
Original assessm ent under Section 158BC/143(3) of the Act was completed at an income of Rs. 56,91,230/- on 31.03.2001. The said Assessment Order was set aside on 20.11.2001 by the Commissioner of Income Tax (CIT) under Section 263 of the Act. In pursuance of the order of the CIT, the Assessing Officer framed fresh assessm ent again at an income of Rs. 56,91,230/- on 31.03.2003 against which the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"]. The CIT(A) allowed relief of Rs. 29,74,579/- and directed the Assessing Officer to reconsider aforesaid impugned order dated 31.03.2004 of Ld. CIT(A). The assessee filed an appeal before the Income Tax Appellate Tribunal ("ITAT", for short). Vide order dated 10.06.2006, ITAT allowed the appeal and annulled the order dated 31.03.2003 passed by the Assessing Officer on the ground th at the Assessment Order passed by the Assessing Officer was barred by limitation. Vide appellate order dated 04.04.2011 of Hon'ble High Court of Punjab & Haryana, passed under Section 260A of Income Tax Act, 1961 ("IT Act", for short; the Hon'ble High Court held th at the Tribunal had grossly erred in holding th at for calculating limitation for passing block Assessment Order, the period as prescribed under Section 158BE of the Act was to be followed even where the CIT had initiated action under Section 263 of the Act; and rem anded to the Tribunal for fresh decision on m erits in accordance with law. The relevant portion of the aforesaid order of Hon'ble High Court of Punjab & Haryana is reproduced as under:
" 6. The is s u e th a t a r is e s f o r co n sid era tio n in th e s e a p p e a ls is w h e th e r th e ord er p a s s e d b y th e A s s e s s in g Officer fo r th e block a s s e s s m e n t p ro c e e d in g s in itia ted in p u rsu a n c e o f th e order p a s s e d b y th e CIT u n d er Section 2 6 3 o f th e A ct w a s w ith in th e tim e p r e s c r ib e d u n d er th e Act.
7. L ea rn ed cou n sel f o r th e reven u e su b m itte d th a t th e s e a rc h a n d se iz u r e operation w a s carried out on th e p r e m is e s o f th e a s s e s s e e on 1 2 .3 .1 9 9 9 a n d th e block a s s e s s m e n t w a s f r a m e d on 3 1 .3 .2 0 0 1 w h ic h w a s w ith in lim itation in te rm s o f Section 158B E o f th e Act. Further, th e CIT in ex ercise o f ju risd ictio n u n d e r Section 2 6 3 o f th e A ct h a d p a s s e d a n order on 2 0 .1 1 .2 0 0 1 a n d in com plian ce thereto, th e block a s s e s s m e n t order w a s p a s s e d b y th e A s s e s s in g Officer on 3 1 .3 .2 0 0 3 . A ccording to th e le a rn ed co u n sel fo r th e reven u e in view o f Section 158 B H in corporated in C h a p ter XIV-B, th e other p ro v isio n s o f th e A ct w e r e a p p lica b le a n d th e A s s e s s in g Officer w a s requ ired to p a s s f r e s h a s s e s s m e n t o rd er w ith in one y e a r fro m th e e n d o f th e fin a n cia l y e a r in w h ic h th e ord er u n d er Section 2 6 3 o f th e A ct h a d b e e n p a s s e d . E laborating fu rth er, le a rn ed co u n sel s u b m itte d th a t accordingly, on e y e a r p e rio d w a s to b e co u n ted fro m 1 .4 .2 0 0 2 a n d th e block a s s e s s m e n t f r a m e d on 3 1 .3 .2 0 0 3 w a s , th u s, w ith in limitation.
8. W e f in d s u b sta n tia l fo rc e in th e s u b m issio n s m a d e b y le a rn ed co u n sel fo r th e revenue.
9. Section 158B E o f th e A ct p r e s c r ib e s tim e limit o f one y e a r f o r com pletion o f block a s s e s s m e n t w h e re th e se a rc h e s w e r e in itia ted b e tw e e n 1 s t July, 1 9 9 5 a n d 3 1 st D ecem ber, 1996, a n d a p e r io d o f tw o y e a r s in c a s e s o f s e a r c h e s co n d u cted a fter 1 s t Ja n u a ry, 1997. H o w ever, in view o f Section 158B H o f th e Act, a ll oth er p ro v isio n s o f th e A ct a p p ly to block a s s e s s m e n ts m a d e u n d er C h a p ter XIV-B. This bein g a n enabling p ro visio n m a k e s all th e p ro v isio n s o f th e A ct a p p lica b le to block a s s e s s m e n t p ro c e e d in g s ex cep t a s p r o v id e d u n d er th e s a id C hapter. B y virtue o f th e a fo resa id provision , Section 2 6 3 o f th e A ct being applicable, eq u a lly lim itation fo r p a s s in g f r e s h a s s e s s m e n t ord er in te rm s th e re o f u n d er Section 153(2A) o f th e A ct a lso ap p lies. A ccording to Section 153(2A) o f th e Act, a f r e s h a s s e s s m e n t o rd er m a y b e m a d e a t a n y tim e before th e expiry o f one y e a r fro m th e e n d o f th e fin a n cia l y e a r in w h ich th e order u n d er Section 2 6 3 o f th e A ct is p a s s e d
10. H avin g c r y s ta liz e d th e legal p o sitio n a s n oticed above, w e n ow a d v e r t to fa c tu a l m atrix in th e p r e s e n t ca se. A d m itted ly, order u n d er Section 2 6 3 o f th e A ct w a s p a s s e d b y th e CIT on 1 1 .1 1 .2 0 0 1 a n d accordingly, th e e n d o f th e fin a n cia l year, therefore, w o u ld b e 3 1 .3 .2 0 0 2 . The p e rio d o f lim itation o f one y e a r in w h ic h f r e s h a s s e s s m e n t o rd er cou ld b e p a s s e d w a s to expire on 3 1 .3 .2 0 0 3 . Thus, th e a s s e s s m e n t ord er d a te d 3 1 .3 .2 0 0 3 w a s w ith in limitation.
11. The Tribunal h a d g r o ss ly erred in holding th a t fo r calculating lim itation f o r p a s s in g block a s s e s s m e n t order, th e p e r io d a s p r e s c r ib e d u n d er Section 158B E o f th e A ct w a s to b e fo llo w e d ev e n w h e re th e CIT h a d in itia ted action u n d er Section 2 6 3 o f th e Act. This in terpretation a d o p te d b y th e Tribunal can n ot b e a ccep ted .
12. In view o f th e above, th e a p p e a ls a re a llo w e d a n d th e order d a te d 1 0 .0 6 .2 0 0 6 p a s s e d b y th e Tribunal is s e t a sid e. The m a tter is re m a n d e d to th e Tribunal f o r f r e s h decisio n on m erits in a cco rd a n ce w ith law . "
(C) It is in this background th at the present appeal filed by the Assessee came up afresh in ITAT for decision on merits, as direted by Hon'ble High Court of Punjab & Haryana; vide aforesaid order dated 04.04.2011. The aforesaid impugned appellate order dated 31.03.2004 of Ld. CIT(A) on m erits is reproduced below for ease of reference:
I. T h e b a c k g r o u n d o f th e c a s e is t h a t a search o p e r a t i o n w a s c a r r i e d o u t 1 2 . 1 0 .1 9 9 9 in th e c a s e o f t h e a p p e l l a n t w h o w a s d e a l i n g in s a le an d p u r c h a s e p ro p erty . A s s e s s m e n t w a s c o m p l e t e d u /s L5 8 1 3 0 / 14 3 ( 3 ) o f t h e 1.1. A c t a t a to i n c o m e o f R s . 5 6 , 9 1 , 2 3 0 / - o n 3 1 . 0 3 . 2 0 0 1 , T h i s o r d e r o f th e A O w a s s e t a s i d e b y t C o m m i s s i o n e r o f I n c o m e ta x , F a r i d a b a d u /s 2 6 3 o f th e I.T. A c t. F r o m th e o r d e r th e A O it is a p p a r e n t t h a t t h e d i r e c t i o n s o f th e C o m m i s s i o n e r o f I n c o m e u F arid ab ad w ere carried o u t d u rin g th e s u b s e q u e n t a s s e s s m e n t p r o c e e d i n g s a t h e A O c a m e t o th e c o n c l u s i o n th a t n o f u r t h e r a c t i o n w a s c a l l e d for. H e a c c o r d in g w e n t a h e a d and r e p r o d u c e d t h e e n t i r e o r d e r d a t e d 3 1 . 0 3 . 2 0 0 1 c o m p u t i n g t u n d isclosed in c o m e a t R s .5 6 ,9 1 ,2 3 0 /-. T h i s a p p e a l is a g a i n s t t h e o r d e r a s s e s s i
1. T h e block a s se ss m e n t order dated 3 1.03.2003 is illegal, bad in law and void
i) As there was no search w arra n t in the n a m e o f the appellant.
ii) As the search is unlaw ful, there b e in g no law ful auth o rizatio n for
iv) T h e initiation o f the so called proceeding s u/s 158 HC o f A ct on the basis oi alleged notice dated 12.10.99 (claim ed to be a notice u/s 158BC o f the A ct) is not
a) non com p lia n ce to the m andatory requirem ents o f p rovisions o f section
b) N o n r e c o rd in g o f p ro p er asse ss m e n t y e a r i.e. block period in.ihe v,
c) N o n m e n tio n in g o f the status in w h ic h the return o f u n d is c lo s e d in c o m e for th e r e l e v a n t b lo c k p e r io d w a s to be fu rn ish ed .
v) B e in g b arred by lim ita tio n p r o v id e d u/s 1 5 8 B E ( l ) ( b ) o f 'th e A c t. v i) F o r non r e c o r d in g o f s a tis f a c tio n , if at all th e re w a s a n y , r e q u ir e d u n d e r s e c tio n 158B D o f th e Act.
vii) H a v in g b e e n p as sed by a p p ly in g the p r o v is io n s o f se ctio n 144/145 o f the A ct.
viii) H a v in g been p a s se d w ith o u t c o m p l y i n g w ith p r o v is io n s o f 132( I ) a n d L 3 2 (9 A )o ftlie A c t.
ix) F o r n o n - c o m p F J a n c e to m a n d ato ry pro ce d u re Paid d o w n in Sec. 158BB . GROUND NO. 2 S in c e the b lo c k a s s e s s m e n t h a s b e e n c o m p l e t e d o n the basis o f i n v e s tig a tio n ca rrie d on b y th e D e p u t y D ir e c to r o f in c o m e tax ( in v e s tig a tio n ), F a r i d a b a d a n d his s u b s e q u e n t re p o rt th e re o n - so c a lle d a p p r a is a l repo rt, the m in d o f th e A s s e s s in g O f f i c e r as w e ll as the a s s e s s m e n t o f p r o c e e d in g s g o t vitiate d . C o n s e q u e n t!} th e b lo c k a s s e s s m e n t o r d e r has got v itia te d .
G R O U N D NO. 3 A d d itio n m a d e o n the basis o f d o c u m e n t A 2 &. A 7 .
a) T h e L e a r n e d A s s e s s i n g O ff ic e r e r r e d on facts as w e ll a s in law in a d d i n g R s. 1 ,8 1 ,8 1 3 /- lo the total t a x a b l e i n c o m e o f th e a s s e s s e e o n th e b a s is o f d o c u m e n t N o .A 7 and in e s t i m a t i n g p r o f i t o f Rs. 1 2 ,5 0 0 /= on sale o f Plot N o . 635/21 B, F a r id a b a d .
b) T h e L e a r n e d A s s e s s i n g O f f ic e r e rre d o n facts as vvelf as in la w in a d d in g e x p e n d i t u r e o f Rs. 1 5,000/- to th e tota l ta x a b le in c o m e o f th e a s s e s s e e
c) T h e L e a r n e d A s s e s s i n g O f f i c e r e rre d on facts as w e ll as in la w in a d d i n g R s . 6 4 , 0 0 0 / - t o i h e t o t a l t a x a b l e i n c o m e o f t h e a s s e s s e e a s c o m m i s s i o n on sale o f p lot m e a s u r i n g 1250 Sq. Y ard s.
d) The L e a r n e d A s s e s s in g O f f ic e r e rre d on fac ts as w ell as in la w in /a d d in g R s .4 2 , 2 0 6 / - to the total ta x a b le in c o m e o f th e assessee as ly c o m m is s i o n on sale of plot m e a s u r in g 2026 Sq. Y ards & 1610 Sq. Y a rd s.
c) The L earned A ssessin g O fficer e rre d on facts as w e ll as in la w in adding R s . 2 0 , 0 0 0 / - to the total taxab le in c o m e o f the assessee as c o m m i s s i o n an d p rofit e a r n e d on sale o f Plot No. 1 18/49, F arid a b a d . 0 'I'he L e a r n e d A s s e s s i n g O f f ic e r e rre d on facts as w e ll as [n la w in a d d i n g R s . 5 ,0 0 0 /- to th e total ta x a b le in c o m e o f the a s s e s s e e as c o m m i s s i o n on sale o f Plot N o . 4 4 2 / 4 9 , F arid a b a d .
The L e a r n e d A s s e s s in g O f f i c e r e r r e d on facts as w ell as in law in adding R s . 2 , 5 6 ,6 6 6 / - to th e total t a x a b le i n c o m e o f th e assessee as p r o fit on d e a l o f 0 6 .1 0 .9 6 as p e r P a g e N o 4 o f D o c u m e n t A 2.
h) The L earned A ssessin g O f f ic e r erred on facts as w e ll as in la w in adding R s . 5 ,0 0 0 /- to the total ta x a b le in c o m e o f the assessee as p er p ro fit on sale o f Plot N o . 4 4 2 /1 9 , F a r id a b a d .
The L earned A ssessin g O ffic er erred on f a c ts as w e ll as in la w in a d d i n g R s . 4 , 6 0 0 / - to t h e to ta l t a x a b l e i n c o m e o f th e a s s e s s e e as c o m m i s s i o n o n sa le o f P lo t at P a li R o a d .
The L earned A ssessin g O fficer erred on facts as w e ll as in la w in a d d i n g R s . 2 , 2 3 , 5 0 0 7 - to th e to ta l t a x a b l e i n c o m e o f t h e a s s e s s e e as p r o f i t f r o m s a le a n d p u r c h a s e o f p r o p e r tie s .
kj T h e L e a r n e d A s s e s s i n g O f f i c e r e r r e d o n facts as w e ll as in la w in a d d in g Rs. 3 , 1 9 2 7 - to the total ta x a b le i n c o m e ol the a s s e s s e e as c o m m i s s i o n on sale o f N e w M u j e s s a r R o a d Plot.
m) T he L earned A sse ssin g O fficer e r r e d on facts as w e ll as in law in ad d in g Rs. 17, 50 07- to th e total ta x a b le in c o m e of the assessee as p r o f it on sa le o f G a n d h a N n la .
G R O U N D NO. 4 A d d i t i o n s m a d e on the b a s is o f d o c u m e n t A 4
a) The L earned A ssessing O fficer e r r e d on facts as w e l l as in la w in adding exp en d itu re Rs. 1 5 ,0 0 0 /- to th e total ta x ab le incom e of th e a s s e s s e e as leg al c o n s u l t a n c y c h a r g e s paid to th e a d v o c a t e .
b) T h e L e a r n e d A s s e s s i n g O f f i c e r e r r e d o n facts as w e l l as in l a w in add in g R s.9 ,1 9 0 /- to th e tota l ta x ab le in c o m e of the assessee on account o f pu rch ase o f A qua G uard.
c) T h e L e a r n e d A s s e s s i n g O f f i c e r e r r e d o n fac ts as w e ll as in l a w in ad d in g R s .71, 2 5 0 / - ( 5 0 , 0 0 0 / = * 2 1 , 2 5 0 / = ) to th e tota l t a x a b l e i n c o m e o f the assessee as c o m m i s s i o n and p r o fit on sale o f P l o t / L a n d m e a s u r i n g 1860 Sq. Y ards.
d) T h e L earned A ssessin g O f f ic e r erred on fac ts as w e ll as in la w in adding Rs. 51,1 1 0 /- to the total taxab le incom e of th e assessee as p r o l i t o f D ah lia Pali R o n d Plot
e) T h e L e a r n e d A s s e s s i n g O f f i c e r e r r e d on facts as w e l l as in la w in a d d i n g R s .6 6 , 8 6 0 7 - to th e total ta x a b le in c o m e o f t h e a s s e s s e e as c o m m i s s i o n and p ro fit On sa le o f 6 A c r e L a n d at S a r u r p u r
f) T h e L e a r n e d A s s e s s i n g O ffic e r e rre d o n facts as w ell as in law in a d d in g R s .8 ,8 0 0/- to the total ta x ab le in c o m e o f the a s s e s s e e w iih o u t any b a s i s . ; . t ... •:
--I _ _ S.. t .> V. _ H g) T he L ea rn e d A s s e s s in g O ffic e r erred on faces as w ell as in law in ad d in g
R s .7 ,0 0 0 /- to the total tax able in c o m e o f the assessee as c o m m i s s i o n on Plot N o . 832
h) The L e a rn e d A s s e s s i n g O ffic e i e rre d on Ih e is as w ell a., m law in adding R s .6 2 ,7 5 0 /- to th e total ta x ab le in c o m e o f the assessee as p r o f it o n s a le o f D u g g a h v a l a P lo t.
i) The L earned A s s e s s in g O l l i c e r erred on facts as well as m law in a d d in g Rs. 19,000/- to the total ta x a b le in c o m e of the a s sess ee as profit o n sale o f 650 Sq. Y a r d s Plot.
j) The L earned A s s e s s in g O ff ic e r e rre d on facts as w e f f as in la w in a d d in g Rs. 5 9 , 9 / 0 - to the total ta x a b le in c o m e of the a s sess ee as p rofit on sale o f Plot m e a s u r in g 1028 Sq. Y ards.
kj The L e a rn e d A s s e s s in g O ff ic e r e rre d on facts as w ell as in law in a dd in g R s.3 3,125/- to the total tax ab le in c om e of the assessee as c o m m is s i o n and profit o n . sale of G u r g a o n w a la P lot m e a s u r in g 1875 Sq. Y ards..
I) The L earned A s s e s s in g O ff ic e r erred on facts as well as in law in ad d in g Rs. 15,000/- to the total ta x a b le in c o m e o f the assessee as c o m m is s i o n on sale o f Plot No. 374/15, i'aridabad.
m) The L ea rn e d A s s e s s in g O ff ic e r e rre d on facts as w ell as in law in ad d in g Rs. 1,400.- to die total ta x a b le in c o m e of the as se ss e e as p rofit rec e iv e d from M endinitla.
G R O U N D NO. 5 A d d itio n s m a d e on the basis o f d o c u m e n t N o .A 5 a) The L ea rn e d A s s e s s in g O ffic er erred on facts as w ell as in law in ad d in g R s.5 ,8 7 6 /- to the total tax ab le incom e of the assessee as j a o l i i on sa le o f Plot N o . 6 2 5 /4 9 , F arid a b a d . ■ ^ -x % N T he L earned A sse ssin g O ffic er erred on facts as well a.% in law in ad d in g Rs,2,700/- to die total ta xable inco m e o f the assessee as
c o m m is s i o n oil sale o f P lot K o . 6 16 49, F arid abad.
c) The [ .e a r n e d A s s e s s i n g O f f i c e r e rre d on facts as w e ll as in la w in adding Rs. 1 1 ,4 5 4 /- to the total ta x a b le in co m e o f th e assesses as c o m m i s s i o n on sale o f P lot m e a s u r in g 166 Sq. Y ards.
d) I he I.e a r n e d A s s e s s in g O f f ic e r e rre d o n facts as well as in Jaw in adding R.s.36,750/'- to the total ta x a b l e incom e o f the assesses as c o m m i s s i o n on sale o f tr a n s a c t io n w ith M a s te r K e w a l R am .
e) T h e L e a rn e d A s s e s s i n g O ff ic e r e rre d on facts as w ell as in law in a d d i n g R s . 9 , 6 8 0 '- to the total t a x a b l e in c o m e o f the a s s e s s e e as c o m m i s s i o : o n sa le o f P lo t N o . 9 4 5 ,2 9 .
f) T h e L e a rn e d A s s e s s i n g O f f ic e r e rre d on f a c t s as w e ll as in la w in a d d i n g R s . 6 3 , 9 3 7 / - to the tota l t a x a b l e - i n c o m e o f th e a s s e s s e e as p r o f i t & com m ission on sale o f p lo t on Pali R o a d G k O L M ) NO. 6 T he L earned A sse ssin g O f f ic e r e rre d o n facts as w ell as in la w in a d d i n g R s . 9 , 3 5 , 0 0 0/- to th e total tax ab le incom e o f the a s s e s s e e as i n v e s t m e n t in sale ol 2 K an a l 5 M a r ia and 7 K an a l 2 M a ria lands.
G U O Li M3 N O .7 T he L earned A sse ssin g O f f i c e r e r r e d o n facts as w ell as in la w in a d d i n g R s . 5 0 , 0 0 0 / - to th e total t a x a b le in c o m e o f t h e a s s e s s e e as c o m m i s s i o n on sa le o f In d u stria l P lot measuring. 1333 Sq. Y ards. , Y ^ r n 3r " fy / A _ Y, G R O U N D NO. 8 T h e L ea rn e d A s se ssin g O ffic e r erred on facts as well as in law in a d d in g .V Rs, 22 ,0 0 0 /- to the total ta x ab le in c o m e o f the a s se ss e e as c o m m is s i o n on sale o f H o u s e N o .4 0 2 / 2 1 B, Faridabad.
G R O U N D NO. 9 T h e L earned A sse ssin g O fficer erred on facts as w ell as in law in ad d irjg f R s .6 ,0 1 ,4 0 0 /- to the total ta x ab le in c o m e o f the a s se ss e e as c o m m is s i o n and in v e stm e n t in respect o f land at B adhkal.
G R O U N D NO, 10 T he L earned A s se ssin g O ff ic e r erred on facts as well as in law in adding Rs. 1 4 ,9 0,0 00/- to the total taxable in c o m e o f the a s se s s e e as in v e stm e n t in au ctio n chits.
G R O U N D N O . 11 T he L ea rn e d A sse ssin g O ffic er erred on facts as well as in law in ad d in g Rs. 12,00,000/- to the total taxable in c o m e o f the assessee as c o m m issio n in c o m e e a r n e d d uring the p e rio d 0 1 , 0 4 ,1 9 9 0 to 3 1 .02 .19 95. G R O U N D N O . 12 III. T h e L e a r n e d A s s e s s i n g O f f i c e r e r r e d o n facts as w e tl as in law in a d d i n g c o m m i s s i o n m e n t i o n e d at G r o u n d N o. 3 to 11 to the total ta x a b l e i n c o m e o f th e a s s e s s e e as th e s o m e r e s u lt e d in d o u b l e ta x a tio n IV . A p e r u s a l o f th e g r o u n d s o f a p p e a l s h o w s th a t t h e r e a r e t w o b lo c k o f a r g u m e n t s o n e o n th e v a r i o u s legal i s s u e s a n d th e o t h e r b l o c k d e a l s th e s p c o h c a d d i t i o n s m a d e by th e A s s e s s i n g O ff ic e r .
V. C o m i n g to t he l e g al i s s u e s ra i s e d b y t he Ld . C o u n s e l t he s a m e a r e not acceptable. R ecords have been exam in ed a n d it is f o u n d t h a t t h e r e is no i n f i r m i t y in t he w a r r a n t o f t h e a u t h o r i s a t i o n a s a r g u e d by t h e L d . C o u n s e l . T h e s e a r c h w a r r a n t is in t h e n a m e o f t h e a p p e l l a n t a n d h a s b e e n i s s u e d b y a n o f f i c e r w h o is e m p o w e r e d u n d e r t he law to i s s ue w a r r a n t to c a r r y o u t search and s e i z u r e u / s 1 32 ( 1 ) o f t h e L T . Act . C o n s e q u e n t l y , t he a r g u m e n t o f t he Ld . C o u n s e l t h a t (lie a u t h o r i t i e s c o n d u c t i n g s e a r c h did so w i t h o u t j u r i s d i c t i o n is n o t acceptable. T h e Ld. C o u n s e l h a s al so r a i s e d t h e i s s ue s o f n o n - r e c o r d i n g o f t he p r o p e r a s s e s s m e n t y e a r a n d t he b l o c k p e r i o d as a l s o t he n o n - m e n t i o n i n g o f t he s t at u s. F u r t h e r it lias b e e n a r g u e d t ha t n o t i c e u/s 1 5 8 B C w a s not s e r v e d u p o n t he a p p e l l a n t . It h as al so b een a r g u e d t hat t he n o t i c e d o e s no t g i v e th e m inimum t i m e as p r e s c r i b e d in t he s t a t u t e . And t h e r e f o r e , t h e n o t i c e u/s 1 5 8 B C m a y b e t r e a te d a s i l l ega l a n d b a d in l aw. It h a s a l s o b e e n a r g u e d t h a t t he A O w a s b o u n d to r e c o r d his s a t i s f a c t i o n f o r i n v o k i n g s e c t i o n 1 5 8 B D o f the LT. A c t a n d h e h a v i n g not d o n e s o di d not h a v e t he j u r i s d i c t i o n to a s s e s s the i n c o m e in t he h a n d s o f the a p p e l l a n t . It h a s a l s o b e e n a r g u e d t h a t t he A O has n o t c o m p u t e d t h e u n d i s c l o s e d i n c o m e a s p r o v i d e d u/s 1 5 8 B B o f the L T . A c t a n d t h e r e f o r e , the a s s e s s m e n t h a s b e e n f r a m e d in c l e ar d i s r e g a r d o f t he l a w a n d d e s e r v e s to be q u a s h e d . T h e Ld. C o u n s e l has al so a r g u e d t h a t t he a s s e s s m e n t o r d e r is t h e c o p y o f t he a p p r a i s a l r e p o r t o f t h e Dy. D i r e c t o r o f I n c o m e T a x a n d as t he o r d e r h a s b e e n p a s s e d w i t h o u t i n d e p e n d e n t a p p l i c a t i o n o f m i n d the s a m e m a y b e hel d a s v o i d . ^ d m J _____ VI. A!! t he above arguments of the Ld. Counsel has been carefully c o n s i d e r e d . A n d it is held t hat the o r d e r o f the A O is valid in the eyes o f law. T h e r e c o r d s do not s u p p or t the a r g u m e n t s t ake n up by t h e Ld. C o u n s e l . The n o n - m e n t i o n i n g o f t he a s s e s s m e n t y e a r or the b loc k p eri od d oe s not u pr oo t the a s s e s s m e n t and such trivial a n o mo l i e s c a n no t m a k e the as s e s s m e n t f ra me d by the A O bad in law. R e c or d s al so do not s u p p o r t the Ld. C o u n s e l that notice was not se rve d. A n d the fact that a s h or t e r t ime w as m e n t i o n e d in the notice w o u l d not agai n upr oot the a s s e s sm e n t in as m u c h as the a p p e l l a n t h i m s e l f did no t c o m p l y wi t h the st at u t or y notice for filing the ret urn on t he d u e date s as p r e s cr i be d by the law after t a ki n g into a c c o u n t the s t a tu t o r y period w hi ch w a s a l l o w a b l e f or filing o f the return. T h e o r d e r o f the A O has al so been caref ully p e r u se d a n d the a r g u m e n t s o f the Ld. C o u n s el t hat t he o r d e r is a copy o f a p pr a i s a l r e po rt o f the Dy. Di r e ct or o f I n c o m e T a x is not s u p p o r t e d by records. A cc o r d i n g l y , it is held t hat t he a r g u m e n t s o f t he Ld . C o u n s e l d o e s not h a v e any s u b s t a n c e and the a ss e ss m e n t f ra me d by the A O is go od in the e y es o f law. VII. C o m i n g to the v arious a d d itio n s m a d e the sa m e are d isc u sse d as below :
!. A D D I T I O N O F Rs . 1, 81, 8 13 / - a n d Rs. 1 2 , 5 00 / -: 1.1 The .4 0 in his order has sta led us under :
"There are 8 w ritten p a g es in the docum ent in w hich transactions relating to rea l estate business o f Sh. M L . Saini have been m entioned fro m 1.3.95 to 1.9 95. In the book let receipts a n d paym ents arising out o f real Estate business Inive been show n The p ea k o f expenditure incu rred by Sh. Saini on these transactions w a s w orked out on the basis o f total receipts an d total M 1 .. f V: / 'V .
P a y m e n ts u p to 3 0 .4 .9 5 . T o ta l re ceip ts w o rk e d o u t to R s 9, 75.0007- a n d to ta l p a y m e n ts w o r k s t o u t to Rs 14,10,000/-. Thus th e r e is a e x c e ss e x p e n d itu r e o f Rs. 4 ,3 5 ,0 0 0 /- a n d re p r e s e n ts h is c u rre n t d is c lo s e d in co m e. In a d d itio n to th is p r o fit and. c o m m issio n e a r n e d by Sh. M . L S a int a re d e ta ile d in th e sh o w c a u s e n o tic e d a te d 1 4 .3 .2 0 0 1 issu e d b y the A O a n d re p ly f i l e d b y Sh. R am Pal, C A vid e le tte r d a te d 1 6 .3 .2 0 0 1 . T he in c o m e f r o m c o m m issio n a n d p r o fit fro m r e a l e sta te b u sin e ss is w o rk e d o u t a cc o rd in g ly , a s u n d e r :-
Sr.No. P lo t -So. P rofit C o m m is s io n
1 117 /4 9 C'o m m issio n a d m itte d Rs. 5 .0 0 0 /
1 53 9 /4 9 C o m m issio n a d m itte d Rs. 3,9257-
Rs. 8,9257-
1745749 -d o - R s 5,0007-
4 11 4 9 .8 - -do- R s . 5,0007-
5. 3 E /1 5 - -do- R s. 5 ,0007-
6. P lo t N o .2 /4 9 C o m m issio n a d m itte d Rs. 5 .0 0 0 /-b u t
e s tim a te d m in im u m c o m m issio n fa J°i, oj
tra n sa c tio n o f Rs. 4 ,3 0 ,0 0 0 /- 8800
47 49 C o m m issio n a d m itte d 1 0 ,0 0 0 /- a n d
50% share is o f Sh. M ohan S in g h
B hatia. N a m e o f M o h a n S in g h B h a tia
d o cs not a p p e a r on th e d o c u m e n t A -7
in r e sp e c t o f this tra n sa c tio n . H ow ever
p r o fit r e c e iv e d fr o m S h iv E sta te
A g et n y fr o m 5-1.95 at R s J! ODD - m
re sp e c t o f this p lo t.
4 7 ,4 9 2000
10000
10 0 0 0 0
8. 1 3 3 7 /4 9 R e c e ip t 25.3. 95 24000
3 4 .9 5 205000
10000
339000
C o m m iss io n (a 2 % 6 7 SO
9. 3 - D /7 4 S o ld f o r Rs. 5 ,7 0 ,0 0 0 /
c o m m issio n e s tim a te d (a 2% 114 0 0
10. 1 7 4 6 /4 9 C o m m issio n a d m itte d 2370
II 3 F /6 3 C o m m issio n a d m itte d 5000
12. 1 4 0 6 /4 9 C o m m issio n a d m itte d 5000
13. 8 7 3 /2 3 C o m m issio n a d m itte d 2000
14. 7 9 -8 0 C o m m issio n a d m itte d Rs,10 ,0 0 0 /- b u t
e s tim a te d @ 2% on Rs. 5 ,5 6 , 0 0 0 /- 1 1 120
15. 3 -E /3 5 B P C o m m issio n a d m itte d 5000
R u n n in g a c c o u n t w ith M r. V irm ani, C o m m issio n
P a id to M r T a n eja (L oss) (-) 982
16. 2 E p lo t p r o p e r ly T ra n sa c tio n w ith M o h a n S in g h B h a tia fr o m 14.3.95 to 1 8 .1 0 .9 5 f o r 2 E p ro p e rty , v- C om m ixxion a d m itted 10000
17. P lo t No. 635 S e c . 21-B In this case fin a l p a y m e n t o fR s . 1,09,500/ Mr. V innani p lu s a g a in on 18.5.95 p a ym e n t o f Rs. 12,500/- has been re c e iv e d w hich is clea rly Profit. Thus c o m m issio n at Rs 5000'. 12500 P rofit 17500
18. In d l p lo t p u r c h a s e d by V idya S u g a r C om m ission a d m itted 15000 but co m m issio n E stim a ted on Rs. 12,10,000/- a t Rs. 2 4 ,2 0 0 / 50% o f S a in i com es to Rs. 12 1 0 0 12100
19. 9 4/49 C om m ission a d m itte d 4000 2(1 2 -K /J6 C o m m issio n a d m itte d 5000 21 . 1 22/49 C om m ission adm itted 4000 22 . 5 8 9 /4 9 C om m ission adm itted 5000 23 P lot exten sio n p a r t- ! S a n ik Colony, Fhd.
2000
24. Dr. S e th i is S h o p C om m ission ad m itted 7500
25. 779/49 C om m ission a d m itte d 4000 26 15 6 4 /4 9 C om m ixs ion adm it te d 4000
27. 2 5 5 5 /4 9 C om m ission ad m itted 5000
28. 947/49 Co mm is s ion adm h ie d 4000
29. Mr. R a n jit Sin g h ' dea l C om m ission ad m itted 3000
30. 5 0 3 /4 9 Conun is:; ion a d m itte d 3000
31. 3 E t 13 B P C o m m issio n a d m itte d 3000
32. 1141 /4 9 C o m m issio n a d m itte d 3000
33. 780/49 C'um m ission a d m itte d 3000
34. 5 ?.6/49 C om m iss ion a d m itte d 3000
35. 1 3 1 5 /4 9 C o m m issio n a d m itte d 3000
36. 8 3 /4 9 C om m iss ion a d m it te d 5000
37. 3 9 9 /1 5 Com in iss io n a d m itte d 10000 T h e s u b m i s s i o n s o f t h e a p p e lla n t t h r o u g h th e L d. C o u n s e l a r e os u n d e r :
T h e L e a r n e d A s s e s s :n g O f f i c e r e r r e d o n facts as w ell as in l a w in a d d i n g Rs. 1,8 1 , 8 13/- to th e total t a x a b le i n c o m e o f th e a s s e s s e e o n th e b as is o f d o c u m e n t N o . A 7 a n d in e s t i m a t i n g p r o f it o f Rs. 1 2 ,5 0 0 /--on sale o f Plot N o . 6 3 5 / 2 I B , F arid a b a d .
Y o u r h o n o u r , a d d itio n o n a c c o u n t o f c o m m i s s i o n i n c o m e h a s r e s u lt e d in d o u b l e t a x a t i o n b e c a u s e c o m m i s s i o n i n c o m e h a s a l r e a d y b e e n d e c l a r e d by the a s s e s s e e in his r e t u r n s o f in c o m e for th e A s s e s s m e n t Y e a r s in th e b lo c k p e r io d .
In case the com m ission income so added is taken as com m ission earned over and above what has been declared by the assessee in his return o f income, still the addition Is unw arranted because the excess stands covered by the undisclosed income declared by the assessee in iiis return o f block and supported by statem ent o f the t assessee recorded during the result o f search on 12.03,1999, and assessee in therefore entitled to relief u/s 158BB. { Withom prejudice lo the above submissions, youi lionour will appreciate that no addition can be made even on the basis of seized material unless it is established that the income mentioned in the seized documents is not included in the income already declared by the assessee in his regular returns i.e. it represents undisclosed income. It is not the case here that the assessee had not filed his returns and therefore it can noi he that each and every income in the seized material re-presented undisclosed income unless so proved. In any case the assessee is entitled to set off of the undisclosed commission income already declared by him in his return o f income for 'hie block period ; u/s 158BB which your honour is requested to please grant. in the c o n s e q u e n c e , y o u r h o n o u r is r e q u e s te d to p le a s e delete,-reduce the a d d itio n o f Rs. 1 , 8 1 ,8 1 3 / - and oblige.
A s for p rofit o f Rs. 1 2 , 5 0 0 / - , it is s u b m i tte d th a t the a s s e s s e e h a d e a rn e d o n ly c o m m i s s i o n on the tr a n s a c tio n in d is p u t e an d c o n s e q u e n t l y the p rofit o f Rs. 12,500/= ad d e d to the total taxable in c o m e m a y p le a se be deleted b e i n g u n w a r r a n te d & b a s e le s s ."
1.3 T i i e i s s ue has b een e x a m i n e d a n d t he s t a n d o f t h e A O is a c c e p t e d ( h o u g h partly. It is a p p a r e n t t ha t ( he c o m m i s s i o n i n c o m e h as c o m p u t e d by the A O f r o m the s e i z e d p a p e r to the e x t e n t of R s . l , 8 1 , 1 8 3 A d e s e r v e s to be u ph el d . T h e r e is no v al i d e x p l a n a t i o n r e g a r d i n g t h e a b o v e e n t r i e s a n d the addition o f R s . 1 ,8 1 ,1 8 3 /- as u n d i s c l o s e d c o m m i s s i o n i n c o m e is u p h e l d .
H o w e v e r , the A O w a s not justified in e s t i m a t i n g p rof it on the sal e o f p l o t in as m u c h a s t h e A O has not b ee n a b l e to s u b s t a n t i a t e his s t a n d t h a t b esi d es n i t \ the commission income the appellant was also the recipient o f profit on the Real Estate transaction. A c c o rd in g ly the stand of the .40 that Rs.42,0004 reflects undisclosed income fo r the block period cannot be upheld and is directed to be deleted from the computation o f undisclosed income.
2. A D D I T I O N O F RS. 1 5 , 0 0 0 4 :
2.1 '/'he AO in his order has staled as under:
O n 1 2 .8 .9 5 p a id to Sh. D ev D ua Rs. 15,000/-. B u t d e a l w as n o t fin a lise d . The su m o jR s . 15 ,0 0 0 /s a id to b e fo rc fiie te d b y D ev D utt. N o evid en c e has b e e n filed . 15000 2.2 T h e s u b m i s s i o n s ol '.he a p p e l l a n t t h r o u g h th e Ld. C o u n s e l arc as u n d e r " It is not understood as to how expenditure can he incom e o f the assessee, Total or undisclosed. Inspite o f concluding that no p aym ent was made, the Learned Assessing Officer added Rs, 15,000/= to the total taxable income o f the assessee, which your honour is requested to please delete."
2.3The issue has been exami ned and die stand o f the A O holdi ng a sum o f Rs. 15, 0004 as undisclosed Income o f the appellant is upheld. The onus was on the appellant to bring forth all necessary evi dences to establish this claim that asum of Rs, 15, 00 0 4 was an expenditure made t o war ds Sh. Devdutt and that this expenditure had been ma de from disclosed s ources o f i n come. The stand o f the AO is upheld. 3 A D D I T I O N O F US. 64,000/- :
3.1 T h e AO in his order has staled as under:
S u g a r S a in i a lo n g w ith B a h a d u r S in g h S a b h a rw a I e n te re d into deal fa r the p u rc h a s e o f p lo t 1250 s</. v o id s fo r Rs. 32 foes, in w hich ileal S a in i sa id that th e d e a l d id nut m a tu re d a n d re fu se d to buy. A s p e r d o c u m e n t N o .A -6 o p p o site p a g e 3, B a h a d u r S ingh S a h h a n v a ! p a id o n e hie an S J 9 7 S u g a r p a id Rs. 3 ,5 8 ,0 0 0 '- a n d B a h a d u r S in g h p a id 2 lacs a g ain on J 1.1.97. Thus, th is d eal se e m s to h a ve m a tu re d 2% co m m issio n in this d e a l to Mr. Saint w o rk o u t to Rs. 64,000m 3.2 T h e s u b m i s s i o n s o f the a p p e lla n t t h r o u g h the Ld. C o u n s e l a r e as u n d e r :
"T h e L ea rn e d A ssessing O fficer erred on facts as well as in law in ad d in g Z A R s . 6 4 , 0 0 0 /- to the total taxable incom e o f the assessee as co m m ission on sale o f plot m easuring 1250 Sq. Yards.
Y o u r honour, 50% share was o f Mr, Sabharwa! and balance 50% w as o f Sh. M .L . Saini & Sh, M.S. Bhatia. A ssessee is therefore entitled to re lie f o f 6 6 % w h ic h y o u r h o n o u r is ret] icsted to p le ase g r a m ."
3.3 The issue has been examined and the stand o f t lie AO is partly upheld. From the order it is apparent that commission income on the sale o f plot had indeed been earned and rightly to the extent of Rs.64,000/-. Rut, however, it is also apparent from the seized records as also from the order itself that 50% share be lo n g to one iVlr.
I . l ■ Sablianval. Under the circumstances the undisclosed income is upheld to the extent of Rs.32,000/-. The appellant will be entitled to relief of a sum of Rs.32,000/-.
4. ADDITION OF RS.42,000/-:
4.1 The AO in his order has stated as under:
'T lo t o f 2026 sq yards. 1610 sq. yards purchased on Jan 97fo r Rs 21.10,368/-. In this regard, it was stated that Rs 6,58,000 - has been paid ,, and amount has not received back as per seized document. On document A-2 and A-8 page 6 clearly show that the transaction was m atured and payments were made. Total commission @ 2% at Rs 42,206/- was paid to Mr. Saint, which is added back to the total income o f the assessee " 4.2 The submissions o f the appellant through the Ld. Counsel are as under:
The Learned Assessing Officer erred on (acts as well as in law / in adding Rs.42,206/- to the total taxable income o f the assessee as commission on sale o f plot measuring 2026 Sq. Yards & 16 10 Sq. Yards.
Your honour, the document A2 relied upon by the Assessing Officer clearly indicates the amount o f commission earned on transaction o f plot measuring 2026 Sq. Yards which is Rs. 10,000/=. As for the commission on transaction o f land measuring 1610 Sq. Yards. The total commission income @ 2% @ Rs.350/= per Sq. Yards come to Rs.l 1,270/= only. The assessee submits that the rate o f commission was @ 1% and is also entitled to 50% relief on account of share o f the other Partner Sh, Mohan Singh Bhatia. Therefore the addition can ho in case exceed Us. 10.635/= (Rs. I 1,270- a 10,000 - 50'% share o f Sh. Mohan Singh Bhatia). The amount would he further reduce to R s.5.230/= in case the assessee's plea relating to the rate o f com mission is accepted. In the result your honour is requested to please delete the addition o f Rs.3 1, 5 7 [!- or R s.36,886/--as the case may be Sc oblige 4.3 T h e plea o f the appe l l ant has been e x a m i n e d and it is a p p a r e n t from the seized record that the c o m m i s s i o n is to be c o m p u t e d onl y for the sale o f land measuring 2026 yards and 1610 sip y a r ds and t herefore, undi scl osed c o m m i s s i o n i n c o m e w o u l d c o m e to Rs. 21, 270/- instead o f Rs.42, 206/- . T h e plea o f the Ld. Co u n se l that c o m m i s s i o n w a s ea r ne d onl y to the extent o f 1% is not s u bs t a n ti at ed by a n y evi de nc e and the plea is rejected that onl y 5 0 % o f the c o m m i s s i o n s h o ul d be treated as u ndi scl osed i n come. To c o n cl u d e, the A O is d i re ct ed to r e c o m pu t e the u ndi scl osed i n c o me by t aking into account Rs.2 1,270/- as c o m m i s s i o n i n c o me in place ol Rs.42,206/-.
5. A D D I T I O N O F R S , 20,000/- :
5.1 The AO in his order has staled as under:
P age 4 there are m any deals with Sh. B.S.Sabharw al a n d M.L. Saini on 20.01.97 B.S. Sabharw al and M.L. Saint invested Rs.6,60,500/- on 20.01.97.
Plot No. 118/49 with K G. Estate A gency 'document A -8 pa g e 5. com plete w orking has done including expenses ot Rs. 37,500/-. The argum ents o f M .L Saint that Rs. 25,000/ given to the p a rty for Pint AT, //.-SV-/0 has hecn /u rejieled is wrong Profit p a id to Su g a r at Rs 13,.LLv a n d deal actually ■matured and cheque of Rs, 50,000/- was m ade on 15.1.95 Sa in t's com m ission and p ro fit is Rs. 20,000/- which is added back to the total incom e o f the assessee fr o m undisclosed sources "
5.2 1'he su b m issio n s o f the a ppe lla n t th rough '.lie Ld. C ounsel are as under:
"The Learned Assessing Officer erred on facts as well as in law in adding Rs.20,000/- to the total taxable income o f the assessee as commission and profit earned on sale o f Plot No. i 18/49, Faridabad. Since the transaction never materialized, neither, com mission nor profit could be added back and therefore y our honour is requested to please delete the addition o f R s .2 0 ,0 0 0 /- & oblige. The Plot stood in the name o f original allottee till recently."
5.3 The issue has been examined and in the absence of a n y evidence la s u p p o r t the conclusion of the AO the treatment o f Rs.20,000/- as undisclosed profit cannot be accepted, it is apparent that the plot could not be accepted. It is apparent that the plot could not be transacted and therefore, any commission income arising out o f such transaction could not have arisen.
6. A D D I T I O N OF RS.5,000/- :
6.1 The AO in his order has stated as under:
P lot No. 442/49 C om m ission adm itted at Rs, 5,000/-. The sam e is a d d ed to the total income o f the assessee.
6.2 Fhe su b m issio n s ol the ap p e lla n t th ro u g h the Ld. C o tm sei tire as under:
"T h e Learned Assessing Officer erred on facts as we/1 as in taw in ad d in g Rs..5,000/- to the total taxable incom e o f the assessee as com mission on s a le o f P I o i No.442/49, Faridabad. Addition having been made twice, [ second time at G round No.3(hj] the assessee is entitled to relief o f R s.5,000/= w h ich y our honour is requested to please grant."
6.3 The issue lias been examined a n d the treatment of commission income as undisclosed income arising out of the plot No. 442/49 is upheld.
7. A D D I T I O N O F R S . 2 ,5 6 ,6 6 6 /- :
7.1 The AO in his order lias stated as under:
''P a g e 4 show s that B.S. Sabahrw al, M .L .Saini a n d KG estate agency entered into a d eal on 6.10.96. Saini invested Rs. 7 lues. The pin! was p u rch a sed far Rs. 27,33,600/- jo in tly by K.G. E state Agency, Saini a n d 13 S. Sabharwa/. and s o ld o j Rs 39.03,6)00/-, Profit Was ea r n e d at Rs 1 1,70,000/-, O ut o f w hich as p e r M.L. Saini statem ent before the A D I on 12.3.99 p a g e 5, Rs. 4 lacs was p a id fo r g e ttin g the prem ises vacated. P rofit ea rn ed at Rs 7,70,000/ approxim ately was d ivided into 3 p erso n s i.e. K .G Estate A g en cy, B.S, Sabharw a! a n d M.L. Saini com es to Us. 2,56,666/- which is a d d e d hack to the total incom e o j the a ssessee fr o m undisclosed sources. 256,666/- " 7.2 The subm issions o f the appellant through the Ld. Counsel arc as under:
''The Learned Assessing Officer erred on tacts as well as in law in adding Rs.2,56,666/- to the total taxable income of the assessee as per Page No 4 o f Document A2.
No addition can be made as per statement of assessee at Page No.5 and 10 taken on 12.03.99.
Your honour the assessee's share in the profit as wrongly taken as 1/3 because there were in fact 4 Partners and therefore the assessee's share cannot exceed 25% which comes to Rs. 1,92,500 - . I ho assessee is therefore entitled to relief to R s.64,166/= which your honour is requested to please grant. Evidence to the effect is in seized materia! A 8 (Page No.3 & 4] ( Pane No. 125-125 o f Paper Book)."
7.3 Th e issue has been ex ami ned. Th e Ld. Counsel has claimed a relief o f Rs.64,166/- by stating that there were four partners in the deal and this was a p par en t from the ratio o f i nvest ment/expendit ure m a d e by M/s K.G. Estate A gen cy , B.S. S abharwal and the appellant. A perusal o f the seized records supports the claim of the appellant as the break up o f i nvest ment/ expendi t ure shows that the appellant had 25% or 1/ 4 th share. T h e A O is directed to recomput e the undisclosed i n c o me by giving a relief of Rs.64,166/-.
C ons e qu e n t ly the stand of the A O to the extent o f R s . 1,92,500/- is upheld. The Ld. Co un s el has also claimed an additional expenditure o f Rs. 2,75,600 - as the p ayment for getting the premises vacated. Howeve r, t he claim cannot be allowed in the absence of corroborative evidence.
8. A D D IT IO N O F R S .5 ,0 0 0 /-:
8.1 I lie AO in Itis order luis staled as under:
P ro fit on sa le o f p lo t No. 442; 19 so ld on 2 0 .1 .9 7 ha s been a d m itte d a t Rs : 000/- w h ich is a d d e d to the ta xa b le incom e o f the a ssesse e " 8.2 rl lie s u b m i s s i o n s o f the a p p e lla n t th r o u g h th e Ld. C o u n s e l a r e a s u n d e r :
L1T h e L earned A ssessing O fficer erred on facts as well as in law in adding R s.5,000/* to the total ta x ab le in c o m e of the assessee as p e r p r o f i t and sale o f Plot N o .442/19, Farida bad. A dd itio n h av in g already m a d e as discussed at G ro u n d No. 3(f) a b o v e the issue m a y please he dealt with ac co rd in g ly b ecause the addre ss 4 4 2 /4 9 and 4 4 2 .1 9 are one and the s a m e as 49 has been w ro n g ly m en tio n e d as 19. Y o u r h o n o u r, the a d d i tio n o f R s .5 ,0 0 0 /= is c o v e r e d by the a d d itio n at G r o u n d N o .3 ( f) a b o v e a n d t h e r e f o r e the a d d i tio n o f R s . 5 ,0 0 0 /= is liable to be d e le te d w h ic h y o u r ho n o u r is r e q u e ste d to ple ase d elete d ."
8.3 T h e i s s ue has b een e x a m i n e d a n d it is a p p a r e n t t h a t t hi s a d d i t i o n ot R s . 5 , 0 0 0 / - has a l r e a d y b e e n t a ke n i nto a c c o u n t by t he A O w h i l e d e t e r m i n i n g the c o m m i s s i o n on a c c o u n t o f plot No. 442/49. T h e A O is, t h e r e f o r e , d i r e c t e d to d e l e t e a s u m o f R s . 5 , 0 0 0 / - f r o m t he c o m p u t a t i o n o f i n c o m e . 9 A D D IT IO N OF R S.2,23,500/-:
9.1 T he AO in his order lias slated as under:
U is r u n n i n g a c c o u n t o f M L . S a in i, B S . S a b h a w a l o n 2 0 . 1.07. S a b h a r w a l receiv ed R s. 6 ,4 3 ,2 8 9 /- w h ich includes p ro fit of R s. 1 , 1 7 ,5 0 0 / - < Rs. 1 , 0 6 ,0 0 0 / - t o t a l i n g R:„ 2 , 2 3 , 5 0 0 / - . "
9.2 i'he s u b m i s s i o n s o f t h e a p p e l l a n t t h r o u g h th e Ld. C o u n s e l a r e as u n d e r :
"The L e a rn e d A s s e s s in g O ffic e r erred on facts as w ell as in 1 in adding R s,2 ,2 3 ,5 0 0 /- 10 the total ta x ab le in c o m e of the assessee profit fro m sale o f p u r c h a s e o f property.
Y o u r h o n o u r , the total p r o fit o f R s . 2 ,2 3 ,5 0 0 = has b e e n a d d e d in the h a n d s o f a s se ss e e w h e re as 5 0 % b elo n g s to the o th e r P a r tn e r Sh. M o h a n S in g h B h a tia . 1 a s s e s s e e is th e re fo r e en title d to r e li e f o f R s. 1 ,1 1 ,7 5 0 /= , w h i c h y o u r h o n o u r r e q u e s te d to p le a s e g r a n t , "
9.3 The i s s ue has b e e n e x a m i n e d a n d the pl ea o f t he Ld, C o u n s e l is r acceptable. The onus was on t he a p p e l l a n t to e s t a b l is h with all n ece ssa e v i d e n c e s a n d c o n f i r m a t i o n s t h a t t he p rof it had to be b i f u r c a t e d b e t w e e n t a p p e l l a n t a n d S h. M o h a n S i n g h B h a t i a . T h e o n u s has no t been d i s c h a r g e d a a c c o r d i n g l y the s t a n d o f the A O t r e a t i n g a s u m o f R s , 2 , 2 3 , 5 0 0 / - as u nd i s c l o s i n c o m e is u p h e ld .
10. A D D I T I O N O F R S .3 ,1 9 2 /_ - :
10,1 T h e A O in his order has stated as under:
P a g e 10 s h o w s th a t th e re is a T ransaction o f N e w M u jesscir R o a d P in t 7
fo ll o w i n g p e r s o n s h a d p a id th e m o n e y :-
a) B a h a d u r S in g h Rs. 1 ,3 0 ,0 0 0 /-
b) M.L. Saini Rs 1.70,000 + 20,000 21.3. O'
They invested Rs. 106000/- each. While the assessee denies the
transaction and it is w rong As saini paid Rs. 1,90,000/-, commission @ 2% to Bahadur Singh & M.L. Saini comes to Rs. 6384,-. 50% share o f M.L. Saini w orks out to Rs. 2192/- which is added to the taxable income o f the assessee. "
10.2 The submissions o f the appellant through the Ld. Counsel arc as under:
"'The Learned Assessing O fficer erred on facts as well as in law in adding Rs.3,192/- to the total taxable incom e o f the assessee as commission on sale o f New M ujessar Road Plot.
Addition on account o f this transaction has already been made as discussed ai G round No.3(g) above. T he addition of Rs.3,192/= is, therefore, liable to be deleted as the same has resulted in double taxation.
10.3 Th e issue has been exami ned and the plea o f the Ld. Counsel is acceptable in as much as the s um o f Rs.3,192/- has already been considered by the A O whi le c omp ut in g the undisclosed income regarding the plot on New Mu zz e s s ar Road. The A O is therefore, directed to delete a sum o f Rs.3,192/- from the comp ut at i on of undisclosed income.
11. AD D ITIO N OF RS,17^500/- :
11. 1 The A O in his order has stated as under:
"Page 5 Gandci Nala plot profit ■■
A d m itte d by the a ssessee ■ Rs. 17,500/
! 7.500/
11.2 T h e s u b m i s s i o n s o f the a p p e lla n t th r o u g h the Ld. C o u n s e l are as u n der;
The Learned A ssessing Officer erred on facts as well as in law
in adding Rs. 17,500/- to the total taxable Income of the assessee as
profit on sale o f G andha Nala.
Out o f total profit of Rs. 17,500/= 50% belongs to Partner Sh. M ohan Singh B hatia an d therefo re the assessee entitled to re lie f o f R s .8 ,7 5 0/= w hich is y o u r ho n o u r is requested lo please grant.
11.3 The issue has been e x a mi ne d a n d the plea o f the Ld. Coun s el is not acceptable. The onus w a s on the appellant to establish with all necessary evi de nc es and con f irmat io ns that the profit had to be bifurcated between the appellant and Sh. Mo h an Singh Bhatia. T h e onus has not been d i sch a rge d and acc o rdi ngl y the stand o f the A O t reating a sum o f Rs. 17, 500/- as undisclosed in c o me is upheld.
12. A D D I T I O N O F R s . 15,000/- :
12.1 '1 he AO in his order has stated as under;
P a id an 13.01.96 to Sh Bahardwaj. Achcate fo r consultancy o f p lo t No.
-714 BP at Rs 15,000/- which is added to the taxable incom e o f the assessee. "
12.2 , he su b m issio n s o f the ap p e lla n t th ro u g h the Ld. C o u n s el a re as under:
The Learned Assessing Officer erred on facts as well as in law , i adding Rs. 15,000/- to the total taxable incom e of the assessee as legal consultancy charges paid to the advocate:
The am ount o f fee was paid to the A dvocate on b eha lf o f the parties to the dispute as the assessee had no occasion to pay any consultancy to any Advocate being not the party to tire dispute relating to Property N o .31-714 B.P. between the .seller and purchaser.
Without prejudice to the above submission, expenditure can not be undisclosed income.
A gain, without prejudice to the above, if expenditure can be income than also only 50% could be added as expenditure being not personal in nature 50% is attributable to the other Partner Sh, M ohan Singh Bhatia. On the contrary assessee is entitled to relief o f Rs. 15,000% & Rs, 7,5 0 0 ,- as the case may be because relief on account of expenditure unearthed as a result o f search has to be given Reliance is placed on 185 C T R 185,"
12.3 T h e issue lias h e e n e x a m i n e d . T h e o n u s w i s on t h e a p p e l l a n t to e s t a b l i s h t h a t e x p e n d i t u r e h a d in d e e d been m a d e a n d t h a t the e x p e n d i t u r e wa s m a d e out o f d i s c l o se d i n c o m e s o r o u t of' u n d i s c l o s e d i n c o m e s w h i c h h a d been d e c la re d for t axable p ur pos e s. H a v i n g failed to do so the t r e at me n t o f Rs. 15, 000/- by the A O as und i s cl os ed i n c o m e is upheld. The plea o f the Ld. C o u n s el that 5 0 % o f the i n c om e sh oul d lie t ake n in the ha nd s o f Sh. M o h a n Singh is not s u p p o r t e d by an y evi de nc e and c a n no t be acc ep t ed . T h e A O shall h o we v er , allow the e x p e n d i t u r e as the s a m e is indeed for business purpose.
13. A D D I T I O N O F Rs.9,190/- :
13.1 T he A O in his order has stated as under:
"P a g e 5, p u r c h a s e d A q u a g u a r d b y .Saini a n d S a g a r 9190 "
13.2 T h e s u b m i s s i o n s o f the a p p e l l a n t t h r o u g h th e L d . C o u n s e l are as under:
-The L earned A sse ssin g O fficer erred on facts as well as in law in adding R s .9 ,1 9 0 /- to the total ta x a b le in c o m e of the a s se ss e e on account o f purchase o f A q u a Guard Y o u r honour, again u is not und erstoo d how an ex p e n d itu re can be incom e o f any assessee.
W ith o u t p rejud ice to the above, Rs. 9 , 1 9 0 / - is the price o f 2 A q u a G uard s, the o th e r p u rch a sed by Mr. Sagar and adm itted by the A sse ssin g Officer. The as sess ee is th e re fo re entitled r e lie f o f R s .4 ,5 9 5 /= ." 13.3 T h e issue has been e xa mi n e d and f rom the facts the plea o f the appe l l ant is accept able and the A O is directed to r e c o m p ut e the i n c o me f r o m undiscl osed in c o me by gi v i n g a relief o f Rs. 4, 595/-.
14. A D D I T I O N O F R S . 7 1,250/-:
14.1 The AO in his order has stated as under
"['a g e - 6 I8 6 0 sq. y a rd s with P.S. Bhaiia, D abua P a tti R oad 28 1.96 Rs. 1,00,000/ 30.1.96 Rs. 1,00,000/ 7.2.96 Its 6,20,000/ 2.2.96 fo r reg istry Rs 30 ,0 0 0 / Rs. 8,50,000/-
Slt. M .L Saint says that this dea l d id not m ateria lized but as p e r p a g e 6 of d o c u m e n t No. 4, total am ount o f Rs. 8,50,000/- has been in vested fo r the p v -chase o f p lo t No. 1860/- a n d it is w ritten 'p ro fit is to be received. ' This d ea l has m aterialized. P rofit on this p lo t is estim ated at Rs. 1,00,000/- a n d co m m issio n fa 2 % com es to Rs. 42,500 /- 50% share o f M .L S a in i w orks out to Rs. 50,000/- - cumin. Rs. 21,250/- is a d d ed to the ta xable incom e of the assessee. "
14.2 T h e s u b m i s s io n s o f the a p p e lla n t th r o u g h the Ld. C o u n s e l are as Linder:
-T h e Learned Assessing Officer erred on facts as well as in law in adding R s .7 1,250/- '50,0007- + 21,250/-) to the total taxable income ol the a s se s s e e as c o m m is s i o n and profit on sale of P lo t/L a nd measuring 1860 Sq. Yards.
Y mi' h o n o u r as already snhinitted I he rate o f c o m mi s s i o n w as never 2% and was in fact 1% only. And as no profit was ear ned on this transaction, your h onour is requested to please grant the necessary r eli ef & obl i ge . "
14,3 T n e i s s ue has b een e x a m i n e d . T h e A O has not b een a b l e to e s tab l i s h that the t r a n s a c t i o n g a v e rise to p ro f it as well as i n c o m e f r o m c o m m i s s i o n . A perusal o f t he order shows t hat p rof i t has been estimated without any s u p p o r t i n g e v i d e n c e w h i c h c ou l d s h o w t ha t this t r a n s a c t i o n g a v e rise to both commission income as w e l l a s profit. The AO is t h e r e f o r e , d i r e ct e d to r e c o m p u t e the u nd i s c l o s e d i n c o m e by d el e t i n g a s u m o f R s . 5 0 , 0 0 0 / - . The c o m p u t a t i o n o f u n d i s c l o s e d i n c o m e on a c c o u n t o f c o m m i s s i o n a m o u n t i n g to R s . 2 1 , 2 5 0 / - is h o w e v e r , u ph el d . T h e plea o f the Ld. C o u n s e l t hat the rate o f c o m m i s s i o n w a s 1 % is no t s u p p o r t e d by a n y e v i d e n c e a n d t h e r e f o r e , t he pica is not a c c e p t a b l e .
IS. A D D I T I O N O F R S. 5 1 , 1 10/- : 15.1 T he A O in his order has staled as under;
"O n p a g e 7 of d o cu m en t No. A O p ro fit oj D abua P alii R o a d p lo t including co m m issio n a n d NIL Sain: a d m itted p ro fit at Rs SINK)/- The sam e is a d d e d to the taxable incom e of the assessee. "
15.2 T h e s u b m i s s i o n s o f the a p p e l l a n t t h r o u g h the Ld. C o u n s e l a r e as u n d e i ;
I lie Learned Asse ssi ng Officer erred on tacts as well as in law ;n adding R s . 5 1,1 1Offi to the total taxable i n c ome of the as sessee as profit o f D ab ua Pali Ro a d Plot.
Y ou r honou r , the deal n eve r materialized and therefore the addi tion of c o m m i s s i o n as well as profit is tin war ranted b ei ng baseless. Al so rate o f c o m m i s s i o n at 2 % is o n the hig he r side as a l re ad y me n ti on e d. Assessee, therefore, m a y p l e a s e be gr anted the n ec es sar y belief." 15.3 T he issue has been e x a m i n e d and the action o f the A O e s ti m a t i ng the c o m m i s s i o n i n c o m e at R s . 51, 110/- is u phel d. T h e o n us w a s on the ap pe l l an t to establish wit h all ne c e ss a ry e vi de nc es and c o n f i r ma t i o n s that t h e profit had to be b i f u rc at e d b et we e n the a p pe ll a n t an d S h . M o h a n Singh Bhatia. T h e o n u s lias not been d i s c h ar ge d and a c c or d i n gl y the s t a n d o f the A O t re ati ng a s u m o f Rs. 51,110/- as u nd i s c l o s e d i n c o m e is up held.
!6. A D D I T I O N O F R S. 66, 860/- :
16.1 T h e A O in his order lias slated as under:
"O p p o site p a g e I I , S a ru rp u r 6 acre la n d deal is w ritten Sh. M.L. So an h a d p a id Rs. 2 5 ,0 0 0 f- as a dva n ce on 1 7 .2 .9 6 w herea s p e r p a g e o p p o site p a g e 11 o j d o c u m e n t No. A-4, the fo llo w in g a m o u n ts are w ritten:-
S a g a r S a in i Rs. 25,000.--
B S S a in i Rs. 23,000/-
M .L S a in i Rs. 23,000/-
S a g a r Saint Rs. 2 5 ,0 0 0 /
Rs. 3 ,4 3 ,0 0 0 /
A s s u c h , th e d e a l was m a te ria lize d 2% C o m m ission on Rs. 3,4 3 ,0 0 0 /-co n ies / > Rs 6 .S 6 0 a m i p r o f it e s t i m a t e d at Rs. 5 0,000:-. Thus Rs (>(■ ' 6 0 - (Rs. a().000-r6860 i is L id d e d to the ta xa b le in co m e of the a ssessor 16.2 \ he s u b m i s s i o n s o f t he a p p el l a nt t h r o u g h the Ld. C o u n s e l are as under :
•• f h e Learned Assessing Officer erred on facts as well as in law in ad d i n g Rs.66, 860/- to the total taxable i nc ome of the assessee as c o mmi s s i on and pro lit on sale o f 6 Acre Land at Sarurpur. Co m mi ss i o n was earned at the rate o f 1% and estimation o f prolit at Rs. 50 , 000/ is baseless as no profit w a s ear ned on the transaction. In case, i f it is held that investment was ma de by the assessee addition o f c o mmi s s i on is not justified. Also entire profit and commi s s i on o f ' Rs 0 0 , ft(■»!)'- can not he ear ned h\ the assessee al one as there w er e 3 other Partners also. Assessee, therefore, may please be granted the n ec es sar y relief."
16.3 T h e i s s u e has been e x a m i n e d . T h e A O has not b een a b l e to e s ta bl i s h that the t r a n s a c t i o n g a v e rise to p rof i t as wel l as i n c o m e f r o m c o m m i s s i o n . A perusal o f the order shows that p ro f it has been estimated without any s u p p o r t i n g e v i d e n c e w h i c h c o u l d s h o w t hat this t r a n s a c t i o n g a v e rise to both c o m m i s s i o n i n c o m e as w e l l as prof i t. T h e pl ea o f the Ld. C o u n s e l t hat the rate o f c o m m i s s i o n w a s 1% is not s u p p o r t e d by a n y e v i d e n c e a n d t h e r e f o r e, the plea is not a c c e p t a b l e . U n d e r the c i r c u m s t a n c e s the A O is d i r e c t e d to r e c o m p u t e the u n d i s c l o s e d i n c o m e by t a k i n g i nto a c c o u n t o n l y a s u m o f R s . 6 , 8 6 0 / - w hi c h r e p r e s e n t s t he u n d i s c l o s e d i n c o m e f r o m c o m m i s s i o n . T h e p l e a o f t l i e , a j j i £ l l a n t regarding the error o f Rs. 10.000/- us also the estimation o f profit is accepted and tin undisclosed income to the extent o f Rs.f>,860/-is sustained.
17. A D D I T I O N O F RS. 8, 8 0 0 / - :
17.1 The A O in his order lias stated as under:
"Document No. .4-4, page 13. it is written p a g e seized from the resilience o f Sh. M.L. Saini O S THIS p a g e profit at Rs 880 0 - and the same is a d d e d to the taxable income o f the assessee. "
17.2 1he submissions ol the appellant through the Ld. Counsel are as under:
■fite Learned Assessing Officer erred on facts as well as in Ian in adding R s.8,800 - to tire total taxable income of the assessee without any basis.
The assessee is entitled to relief o f 50% which was share o f other Partner Sh Mohan Singh Bhatia which your honour is requested to pleasegrant." 17.3 The issue h a s been e x a m i n e d a n d the plea o f the Ld. C o u n s e l is nut a c c e p t a b le . Tim o n u s w a s on t h e a p p e l l a n t to est abl i sh w i t h all n e c e s s a r y e vi denc e s a n d c o n f i r m a t i o n s t h a t the p rof i t h a d to be b i f u r c a t e d b e t w e e n the a p p e l l a n t a n d Sh. M o h a n Singlt Bhat i a. T h e o m. s has not bee n d i s c h a r g e d a n d a c c o r d i n g l y t h e s t a n d o f t h e A O t r e a t i n g a s u m o f Rs.8,800/- as u n d i s c l o s e d i ncome is u p h e l d .
IS. \ D D 1 T 1 0 N O F RS. 6 2 , 750/ - :
18.1 The AO in his order has stated as under:
O uggal wain p lo t := 525x390- 2 047 5 0
125x425 52500
2,57,250
This a hove p lo t was s o l d / o r Rs.3,20,000/-. The assessee has m ateria lized this deal
because R s.3,20,000/- has- been received by the assessee. F o r this p lo t Sabney is a purchaser and registry charges have been shown at Rs 40.000/- Thus, profit on the above plot which works out to Rs. 62.750 /- (3,20.000-2,57,250) is a d d e d to the taxable income o f the assessee "
18.2 ; he subm issions o f the appellant through the Ld. Counsel are as under:
"T h e Learned Assessing -Officer erred on facts as well as in law iti adding Rs.62,750/- to the tolal taxable income of the assessee as profit on sale o f Duggalwala Plot.
No profit was earned by the assessee as he was not the owner. Addition o f profit o f R s .62,750/= is therefore baseless. In case the addition is up held, relief o f Rs.34,875/- on account o f 5 0 % share o f Partner Sh. Mohan Singh Bhalia may please be granted as the entire profit has been taxed In the hands o f the assessee alone."
18.3 The issue Inis been examined. A perusal o f the seized d oc u me nt s shows that the profit has been actually worked out to the extent of Rs. 19,000/- only as against the u ndi scl osed c o m m i s s i o n i n c o me w o rk e d ou t to Rs.62, 750/-. The total deal w o r k s out to Rs.2, 57,250/ - arid on a sale c onsi der at i on o f Rs.2, 76,250/ - (sale consi der ati on of 650 sip y a r d s at the rate o f 425/-), T h e A O is therefore, directed to r e co m p ut e ( l ie undi scl osed income a I l-ts. 19,1)00 /- a s a g a i n s t a s u m ol' Rs.62, 750/-.
19. A D D I T I O N O F R S . l 9,000/-:
19.! The AO in Ins order has stared as under:
"O pposite p a g e 16, 650 sq. yards plo t @ 4255- i.e. total values com es to Rs. 2,76,250/- has been m entioned an d profit on-this plot-is w ritten at Rs. 19,000/ 19.2 T h e subm issions o f the appellant through the Ld. C ounsel arc us under:
•The Learned Assessing Officer erred on facts as well as in law in adding Rs. 19,000/- to the total taxable income of the assessee as profit on sale o 1650 Sq. Yards Plot Your honour, the deal never materialized and therefore the estimation o f commissi on as well as profit is unwarranted being baseless. Also rate o f commissi on at 2% is on the higher side as already mentioned. In any case, assessee is entitled to relief o f 50% on account o f share o f other partner which may please he granted."
19.3 Th i s issue has already been dealt in the earlier para and the re f or e, it is a p p a r e n t f rom the facts that R s . 19,000/- lias been treated as u ndi scl osed i n c o me o f the a p pe l la n t twice. I rider the c i r c um s t a nc e s the A O is di re ct ed to delete the s u m of Rs. 19,0 00/- f rom the c o m p u t a t i o n o f u nd i s c l os e d i n co me.
20. A D D I T I O N O F U S . 59, 970/- :
20.1 The AO in ids order luis suited as under:
" O n page 16,1028 sq. yards plot has been me n t i o ne d . T h e a s s es s ee has not m e n t i o n e d this plot in his reply. Profit on this plot has b ee n s h o w n at Rs.
59. 970/-. T h e s a m e is a dde d to the t axable inc o me o f the a ss e s s ee . '' 20.2 T h e s u b mi s s i on s o f the appellant t hr oug h the Ld, Co u n se l are as under:
"T h e Learned Assessing Officer erred on facts as well as in law in adding Rs.59,970/- to the total taxable income ol the assessee as profit on sale o f Plot measuring 1020 Sq. Yards; and"
20.3 T h e issue has been e x a m i n ed and the st and o f the A O is uphel d in as muc h there is no e v i d e nc e with the appe l l a n t to s u p p or t his cl ai m or (here is an y e v i d e nc e wit h the a ppellant to refute the f indings of the A O . T h e plea o f the a p pe ll a n t that 5 0 % s h a re s h oul d he taken out o f the i n c o m e o f the appe l l an t as it b el ong s to sh. M o h a n Si ng h Bhatia is also not a c c e p t a b l e an d t he re is no e v i d e nc e to s u p p o r t this cl aim. T h e r e is no evi de nc e to show that Sh. M o h a n Singh Bh at ia w a s involved in all these t ransact ions and w a s a p a r t ne r in the t r a ns a c t i o n s carried out by the appellant.
21. A D D I T I O N O F RS. 33,125/-:
21.J Tue AO in his order has stated as under:
"Page 17 C urgaon w ala plot m easuring 1875 sq. yards. Profit on (his p lo t has been w ritten by Sh M L . Sam i aat Rs. 28,125 - and comm., at Rs. 5,000/-. Thus. Rs. 3 3 ,125/- is added to the taxable incom e o f the assessee. "
21.2 T h e s ub mi ss i ons o f the appellant thr ough the Ld. Cou ns el are as under
-'I he Learned Assessing O fficer erred on facts as well as in law in adding R s ,3 j > ■ to the total taxable incom e of the assessee as commission and profit on sale of Gurgaonw ala Plot measuring 1875 S c . Yards; and"
21.3 T h e issue has been e x a mi n e d and the s t and o f the A O is upheld in as muc h there is no evi dence with the a p pe ll an t to s u p p or t his claim or there is any evi de nc e with the appellant to refute the findings of the A O . T h e plea of the a p pe ll a n t that 5 0% sha re should he taken out o f the i n c o me o f the appe l l a n t as it behmgs to sh. M o h a n Singh Bhatia is also not a c c ep t a bl e and there is no e v i de nc e to s u p p or t this claim. T h e r e is no evi de nc e to show t hat Sh. Mo han S ingh Bhatia w as involved in all these transactions and w a s a p a rt ne r in the transactions carried out by the appellant.
22. A D D I T I O N O F R S . 1 5, 000/ - :
22.1 The AO in his order has stated as under:
"On p a g e 2 ! o j document N o --I, Plot No. 374, S e c - 15 is written. Profit an d i immission oj Sh. M.L Saini on this p lo t is e s tim a ted at Rs, ! 5,(101'-. This p lo t w a s p u r c h a s e d join tly by Sh M L. Saini a n d Mohan Singh Bhatia "
22.2 I he .submissions ol ihe appellant ihnmuli the Ld. C ounsel are as under:
' The Learned Assessing Officer erred on facts as weft as in law It adding Rs. 15,000/- to the total taxable income of the assessee as commission on sale o f Plot N o.374/15. Faridabad, as indicated by the document AS, Page N o .2 1. itself: and"
22.3 T h e iss ue has been e x a m i n e d and the st and o f the A O is upheld in as muc h there is no evi de nc e with the a ppe ll an t to s u p p o r t bis claim or there is any e v i d e nc e wi t h the appellant to refute the f i ndi ngs o f the A O . T h e plea o f the appe l l ant that 5(1% s h a r e sh ou l d be taken out o f the i n c o m e o f the a p p e l l a n t as it belongs to sh. M o h a n Singh Bhatia is also not a c c ep t abl e and there is no e v i d e nc e to s u p p or t this claim. T h e r e is no evi de nc e to s h o w t hat Sh. M o ha n Singh Bhat i a w a s involved in all these t ransact ions and w as a p a r t ne r in the t ran sa ct io n s carri ed out by the appellant.
23. A D D I T I O N OF RS . 1, 40 0/ - :
23.1 The AO in his order has stated as under:
" a p p o s ite p a g e c22, pro/it re c e iv e d from M ehandiratta by M.L, Saint is written 1400:'-. "
23.2 The submissions o f the appellant through the Ld. Counsel are as under:
■The Learned Assessing Officer erred on facts as well as in law in adding Rs. 1.400'- to the total taxable income of the assessee as profit receive from Meudirallti ; and"
23.3 T h e i s sue lias b e e n e x a m i n e d a n d tiie s t a n d o f t h e A O is u p h e l d in as m u c h t h e r e is no e v i d e n c e w i t h the a p p e l l a n t to s u p p o r t his c l a i m o r t h e r e is a n y e v i d e n c e w i t h t h e a p p e l l a n t to r e f u t e t h e f i n d in g s o f t h e A O . T h e plea of t h e a p p e l l a n t t h a t 5 0 % s h a r e s h o u l d be t a k e n o u t o f t h e i n c o m e o f t h e a p p e l l a n t a s it b e l o n g s to sh. M o h a n S i n g h B h a t i a is also n o t a c c e p t a b l e a n d t h e r e is no e v i d e n c e to s u p p o r t t hi s c l a i m. T h e r e is no e v i d e n c e to s h o w t h a t Sh. M o h a n S i n g h B h a t i a w a s i n v o l v e d in all the s e t r a n s a c t i o n s a n d w a s a p a r t n e r in t h e t r a n s a c t io n s c ar r ie d out by the appellant.
24. A D D I T I O N O F RS.5,876/- :
24.1 The A O in his order has stated as under:
Page 1 o f document No. 4-3., plot 625/49 has been written. Sam i's share in this plot is 60% in this transaction. Saini has admitted profit at Rs. 5,876/- on this plot. 5876/ 24.2 The submissions o f the appellant through the Ld. Counsel arc as under:
'The Learned Assessing Officer erred on facts as well as in law .n adding Rs.5,S76/- 10 the total taxable income of the assessee as t-rofit on sale o f Plot N o.625 49, Faridabad; and"
24.3 Oile i s s u e h a s b e e n e x a m i n e d a n d t h e s t a n d o f t h e A O is u p h e l d in as m u c h t h e r e is n o e v i d e n c e w i t h t h e a p p e l l a n t to s u p p o r t his c la i m o r t h e r e is a ny evidence with the a p p e ll a n t re f ut e the findings o f the A O. T h e plea of t h e a p p e l l a n t t h a t 5 0 % s h a r e s h o u l d be t a k e n o u t o f t h e i n c o m e o f t h e a p p e l l a n t a s it b e l o n g s to s h. M o h a n Sin g h B h a t i a is a l s o n o t a c c e p t a b l e a n d t h e r e is no e v i d e n c e to s u p p o r t this c l a i m . T h e r e is n o e v i d e n c e to s h o w t h a t S h . M o h a n S i n g h B h a t i a w a s i n v o l v e d in all t he s e t r a n s a c t i o n s a n d w a s a p a r t n e r in t h e t r a n s a c t i o n s c a r r i e d o u t by the a p p e l l a n t .
25. A D D I T I O N O F RS.2,7(J(J/- :
25.1 I he AO in his order has stated as under:
"Opposite page-2 of document So. A-5 p lot No. 616/49 is mentioned. As p e r this document Mr Virmani has p a id advance for this p lo t at Rs 50.000/ and Sh. M.L Saini has admitted commission o f Rs. 2706/- on this plot. 2706,-. "
25.2 The submissions o f the appellant through the Ld. C o u n s e l are as under:
' 'T ne Learned Assessing Officer erred on facts as well as in law in adding Rs.2,700/- to the total taxable income of the assessee as commission on sale o fP lo tN o .6 16/49, Faridabad. 5' nr honour, the estimation o f profit is unwarranted being hnseless. A lso rate o f a.- nniission at 2 % is on the higher side as a'ready mentioned. Further, assessee is e:; it led to re lie f o f 5 0 % on aeeouni o f share ol other I'artner."
25. 3 f h e i s s u e h a s b e e n e x a m i n e d a n d t h e s t a n d o f t h e A O is u p h e l d i n a s m u c h t h e r e is n o e v i d e n c e w i t h t h e a p p e l l a n t to s u p p o r t his c l a i m o r ( h e r e is a n y e v i d e n c e w i t h t h e a p p e l l a n t to r e f u t e t h e f i n d i n g s o f t h e A O . T h e plea o f t h e a p p e l l a n t t h a t 5(1% s h a r e s h o u l d b e t a k e n o u t o f t he i n c o m e o f t h e a p p e l l a n t a s it b c l m g s to s h . M o h a n S i n g h B h a t i a is a l s o n o t a c c e p t a b l e a n d t h e r e is n o e v i d e n c e to s u p p o r t t h i s c l a i m . T h e r e is no e v i d e n c e to s h o w t h a t S h . M o h a n S i n g h B h a t i a w a s i n v o l v e d in all t h e s e t r a n s a c t i o n s a n d w a s a p a r t n e r in t h e t r a n s a c t i o n s c a r r i e d out by the a p p e lla n t.
2d. A D D I T I O N O F K S . I 1, 454; - :
26.1 The A O in Ins order has stated as under:
"P lot m easuring 166 s<j. ya rd s so ld fa) 3450%. Total value com es to Rs.
5 , 7 2 ,700/-. R egistration was got done at f o r Rs. 80,000/- p a id by draft. 2%
com m ission on this estim ated at Rs. 11.4547-. "
26.2 T he subm issions o fth c appellant through the I d. C ounsel are as under:
Yo ur honour, 166 Sq. Yards is not any plot but is the size o f the Plot 6 36.49.
Com m ission o f the plot has already been added at Ground No. 5(b) above. Addition ol' Rs) 1,454/- U therefore baseless which your h on o ur is requested to please delete."
263 I he issue hits been e x a m i n e d a n d it is a p p a r e n t f r o m t h e facts t h a t this a m o u n t w h i c h has been t r e a t e d as u n d i s c l o s e d i n c om e has a l r e a d y been t a k e n into a c c o u n t by the A O while d e t e r m i n i n g u n di s c los e d i n c ome of Rs.2,700/- f or t he sale of plot N o . 6 1 6 0 9 , F a r i d a b a d .
27. A D D I T I O N O F RS.36, 750/- :
27.1 The A O in his order has stated as under:
The a s s e s s e e has m a d e it tra n saction with M a s te r Kexval Ram . The assessee s a y s that this tra n sa c t ion has n ot m aterialized. But thus tr a n s a c tio n with Mr. k e w a l on 12. 9. 96 ua/.v m a te r ia l iz e d fo r Rs. 23.50.00(i/- A d v a n c e m w p a i d at Rs. 1 lac.
O P. S h a n u a p a id Rs. 5 0 .000/- I ?. 9.96
K ishore Sachdew : Rs 50,000/- i 7.9.96
B halla Chaclut Rs. 50.000/- 18.9 96
B ahadur Singh Rs. 50,000/- 18.9.96
In this w ay a dvances were given by the above persons. The transaction seem s
t(> h a ve m aterialized, because the above m e n tio n ed ad va n ces were not
rec e iv e d back as p e r entries in the se ize d records. C om m ission a n d p ro fit on
this d e a l is e stim a te d at Rs. 36, 750/-. "
27.2 T h e s u b m i s s i o n s o f the appellant t h r o u g h the 1 d. C o u n s e l are as under :
rw i *
* " The Learned Assessing Officer erred on facts as well as in law
in ad di ng Rs.36.750-- to the total taxable income of the assessee as
commission on safe o f transaction with Master k ew a l Rain. Y-iiJr honour, [lie deal never mutenr.li/ed ;nul lllis llle la d !S vers in ill'll \cn liable from Master K e w a l Ram who may please be summoned in case the asscsee's plea is net accepted. Without piv'm .li.c to oiiic above Mibmissions, o n ly com m issio n could be added and that too only 11' the deal had m aterialized. A d d itio n o f Rs. 36,750.'= nv.y please he deleted "
27.3 T h e issue lias been e x a m i n e d a n d t h e plea of the I.d. C o u n s e l is n o t a c c ep t a b l e .
The oiim w a s c i i t i r e h on (lie a p p e l l a n t to est a bl i sh t h a t the deal d i d n o t ma t er i a l i ze . The stand of the AO treating a sum of Rs.36,750/- a.s undisclosed income of the appellant is u p h e l d .
28. A DDI TI ON OF RS.9,35,000/-:
28.1 The A O in ins order has stated as under:
"Sh. M i. Siiiiii h a d im rclutseil the lollow ing properties in equal partnership with S h M ulak Raj Bhatia. .7-2, .\e h n i Ground. Faridahaci from Sh. Teh Ram S/a N arain Singh o f Village PctllL h irst transaction 7 Kctnals 5 M arias land registry N o .! ! 164 dated 11-3.99 1.36.009 iim i transaction 7 Kctnals 2 manias agi'i. land register So. i ! 165 da ted l i 3.99 3 ,1 1.0 0 0 -
The above tw o transaction have been adm itted b y the assessee w ith Sh. M ulah R aj B hatia a n d the assessee has also a d m itted to have p a id registry ch a rges at T" L j,. i .i • Its. 24,160/- in respect of the first transaction an d registry charges in respect o f iincl transact inn Rs. 49,760; The seized p a p ers in respect o f these transactions are p la c e d at p a g e s 34 to 40 As p e r these loose papers Si:. M.L. S a in i a n d B ahadur Singh p u rc h a se d agri. 'mud from B ijcndcr , Tek Ram, R ajhir an d R tjc n d e r o f 40 K anals o f a g ri la n d in village P alli As p e r agreem ent d a ted 15/16.8.97 a, 16 lacs p er acre. It is relevant to p o in t out that Sh. B ahadur Singh p u rc h a se d his share o f land through his benam i Sh. M idak R aj Bhatia. H ow ever, only the above m entioned transactions rela tin g to 9 K anals 7 M artas was fin a lised an d registry was registered in the n, one o f Sh. M I Saini a n d Midak Raj B haia(B cnam i o f B.S. Sabharw at). Thus the total in vestm ent m the purchase of these tw o deals are callable with the D ep a rtm en t w hich com es to Rs. 18,70,000/-. M arket rate o f 16 lacs p e r acre m en tio n ed in the seized docu m en t m e n tio n e d above and not the value sh o w n in the registered d o cu m en t at Rs. 3.11, (ftJO/- a n d 1,56,000/-. Thus the share o f M.L. S a ini comes to Rs. 9,35.000/- which is a d d e d to the taxable in co m e o f the assessee as u nexplained in vestm ent 28.2 T h e s u b m i s s i o n s o f the app e l l a nt t h r o u g h the Ld. Co un s el are as under:
" T h e Learned Assessing Officer erred on facts as well as in law in adding Rs.9,35,000/- to the total taxable income o f the assesses as investment in sale o f 2 Kanal 5 Maria and 7 Kanal 2 Maria lands.
Your honour, assuming that the transaction took place [a 16,00,000 = per Acre, the assessee is entitled to relief o f his share already declared in the deed w hich comes to R s .2,33,500/-. A d dition o f R s .9,35,000/= is therefore liable to be reduced by R s.2,33,500/= which your honour is requested to please reduce. A lso transactions effected after dale of authorization cannot be considered in assessment based on that authorization and llicrcJfne add:Lion ol R:- .935,000/- is linblo It.) be tieleteti."
28,3 Tin' issue lias been e xa mi ne d an d t lie relief el aimed by the a p p el l a n t tu e x t e n t ;>l Rs.2,37,500/- is held to be allowable as this s u m forms a p a r t of the enti re tr ansact ion a mo u n t i n g to Rs. 18,70,000/- out of which the s h a r e o f the a p p e l l a n t comes to Rs. 9,35,000/-. The a ppel l a nt is therefore, entitled to a relief of Rs. 2,33,500/- out of a s u m of Us. 9.35.000/- which has been treated by the AO as undisclosed income.
29. A D D I T I O N O F R s . 50 , 00 0 / - & Rs. 22 , 00 0 / - :
29 , 1 The A O in his order has stated as under:
"Vide rep!} dated 20.3.200! in reply to cnsr notice dated 19.3 91, assessee's counsel replied that in respect oj the sale oj h u ll plot measuring 1333 sq. yards purchased by Sh. Vidyu Sugar Saini, Jrunt Sh. R.K. Bhatia for Rs. 40,40,000/-. Sh M.I Saini and KG Estate Agency earned commission oj Rs SO,000f- (dl2% of (.me Hide. S a in i's commission mas Rs. 40,000/- which is adm itted by the assessee. It mav be further added that Sh. B.S. Sabharwa I in his statement recorded in his ease that 're also p a id vonrtnirsion ej Its ill,000/- to Sh. M .L Saini. adm itted by the assessee and added Total addition on this transaction will he Rs. 50. i/00/-. ' " 'I he assessee's counsel and the assessee have denied to have received any com m ission in this deal. R ut SI:. M .L . Saini in his statement recorded on 11.3.99 during the course o f search in reply to question N o.! 2 stated that in this deal as per agreement dated 1 1 ! .98 between V ija y K u m a r R/o 3 -00 0 , N i l , Faridabad on one side and Sh. (iurdeep Singh deal was finalised @ 2200 per sq. yarci. Total consideration was Rs. 1 ! lacs Sh. M.T.. Saini further stated that this transaction was executed at his residence. Since the transaction has muterialiiced, the c o n n i n ', sum (ii 2"-'» is a s s e s s a b l e in the hands ol Sh. M .L . Sain which comes to Rs. 22.000,-."
29.2 The submissions ofthe appellant through the Ld. Counsel are as under:
"The Learned Assessing O fficer erred on facts as well as in law in adding R s.50,000/- to the total taxable income ol die assessee as commission on sale of Industrial Plot measuring ! 333 Sq. Yards.
The Learned Assessing Officer erred on facts as well as in law in adding Rs.22,000/- to the total taxable income o f the assessee as commission on sale o f House Nlo.402/21ii, Faridabad.
The assessee is entitled to relief of 50% or. account of 50% share of Partner Sh. Mohan Singh Bhatia which your honour is requested to please grant."
29.3 T h e a d d i t i o n o f Its. 50, 000/ is u p h e l d w h e r e a s the a d d i t i o n o f R s . 22,000/ shal l s t a n d d e l e t e d in view o f the s t a t e m e n t of t h e a p p e l l a n t d u r i n g s e a r c h as also t h e f a c t t h e r e is no o t h e r m a t e r i a l to s u p p o r t A O ' s c o n t e n t i o n . 29.4 T h e issue has been e x a mi ne d a n d the plea o f (he Ld. Co u n s e l is not accept able. T h e on u s was on the a p p e l l an t to establish wi t h all nec e ss a ry evidences a n d c o n f i r ma t i o n s t h a t the prof i t h a d to be b i f ur c a t ed be t we e n the a p p e l l an t a n d Sh. M o h a n Singh b h a t i a . T h e on u s has not been d i s c h a r g e d a n d iii<corc!iiif;ly t h e s t a n d o f the* A O t r e n t i n g a s u m ol R s . 2 , 23 , 50 0 / - ;is u n d i s c l o s e d income . upheld,
30. A D D I T I O N O F R s . 6 , 0 U <) 0 / - :
30.1 The A O in his order has staler! as undei ", f.v j'cr docum ent ,T 12. page 6 of S h Suhhash derma, original receipt doled 2S 9 98 fo r Rs 15.57,000/- in respect o f land at. Badhka! m casiting 3 '5lh o f 53 K anals 17 m arlas issued by Japan, Husain, M aman, Ismail, Yasoun an d Shoare and pow er o f attorney o f above m entioned land given by the above m entioned persons in fa v o u r o f A n d Macian. K ulbhushan, M.L. Saint. Sanjay K um ar M atliur a n d Burlap Singh. Sh. Subhash Verma h a d p a id Rs. 6,90,000/ an d M .L Saini has p a id Rs 4.90.000 - plus 4 0 .0 0 0 - totaling Rs. 5.30.000/- to Si: Subhash Ycrma and it is relevant to point out that Rs. 40,000'- was p a id by cheque and registry deed has been fin a lise d as p e r p a g e 21 o f docum ent A- 12 o f Subhash derma, /is such Rs. 30,000 - in the purchase of BadhkaI land a is le d hack to the total incom e at the assessee. This la n d a 11.9 acre totaling Rs. 7 I f 0.000,- uym transacted in to. H ence, a total o f 2% com m ission on this transaction comes to Rs. 1.42,800/- were share by Subhash derm a and Saint. So the 50% com m ission at Rs. 71,4005- are liable to tax in the hands o f Sh. Saini. Total addition on this transaction w ill be Rs.
6,01,400/-. "
Tv p e r docum ent A-2 opposite page V Sh. M L Saini had contributed !() chits of Rs. 10,000/- p e r month, 6 in his name, one in the nam e o f Manila, 2 in the nam e of Vidyu Sugar Saini an d one in the nam e o f O.P. Sharm a. The ' s i -'lenient o f S h M L . S a in i i w recorded d u rin g Lite course o f assessm ent on _V 3.2001 a n d Sh . S a in i a d m itte d that he h a d s u b s c r ib e d to 10 chits o f th e C ar L u c k y D raw S c h e m e up! a 10.5.97 a n d upia May, 97 h e has contributed Rs. 4,90,000/- f r o m his own p o c k e t but the instalm ents o f R s. 65,000/- p e r month have a ls o been p ic k e d fr o m 10.6.97 to 10.3.98.
A s p e r d o c itn te n t S o A - i ■■/ h u fe r jit S in g h p a g e 3 M s S a in i E s ta te Ig e n c y ( M L . S a m i / paid, Rs 39.070 - as in s ta lm e n ts to w a r d s an a u c tio n chit o f Rs 6 la s w hich 11m p ic k e d u p !\v Sh. Damien S in g h . A d v o c a te f o r Rs. 4.40,000/ incurring a lo s s o f Rs. 1,86,000/-. S o a ccording to this chit Sh. S a in i p a i d 15 instalm ents o f a p p r o x im a te ly 3 5 ,0 0 0 '- p e r m o n th , th is m aking an in v e s tm e n t of Rs. 5 , 2 5 ,000s -. S im ila r ly as p e r loose p a p ers o f auction chit fo u n d fr o m the r e s id e n c e o f S . K. M a lh o tra . Saini E s ta te A g en cy p a id instalm ents oj a n d inn c h its o f 6 /a c s n t p p c s o n 2 4 .8 .9 7 , 13!h g r o u p which w a s lifte d b y one S h ._ f o r R s 5,64,000/-. Thus Saini invested in this 13th auction c h its )5 " ' in s ta lm e n ts o f a p p r o x im a te ly 3 5,0 0 0 -- p e r m o n th to ta lin g Rs. 5,25,000/-. T hus R esid e his r e a l e s ta te b u sin e ss, p r o f i t a n d c o m m is s io n . Sh. M.S. S a in t d in v e s tm e n t in th e h a c k c o r n e r o f in d e t j i t S in g h a n d n n c ti n c h its to ta lin g Rs, /4.90,006/- in v e s tm e n t f r o m u n d is c lo s e d s o u r c e s a n d lia b le to he a d d e d in th e ta x a b le in c o m e o f th e assesse.es.
2 T h e s u b m i s s i o n s o f t h e a ppe ll ant through t h e Ld. C o u n s e l a r e as under:
•The Learned A ss e ss in g Officer erred on facts as w e l l a s in la w i n adding R s . 6 , 0 1 , 4 0 0 / - to t h e total t a x a b l e i n c o m e o f t h e a s s e s s e e as c o m m i s s i o n a n d i n v e s t m e n t in r e s p e c t o f l a n d at B a d h k a l ; a n d r f M _l * _ L .ifMi Tie L e a rn e d A s s e s s i n g Of f ic er erred o n facts as well as in l a w in a d d i n g R , 1 4, 90 , 0 0 0 - to llie total t a xa b l e i n c o m e o f the a s s e s s e e as i n v e s t m e n t in auction el as. *» • You r honour, addition o f Rs. 6 , 0 1 , 4 0 0 / - & Rs 14.90,000/= has been ma de by the learned Ass e s s i n g Off icer relyi ng on the d o cu m e n t in his possession wh ic h w er e not seized f rom the assessee' s pr emi ses but from premi ses o f Sh. S u b h a s h V e r m a and Sh. Inderjeet Singh and were later ma d e available to the As s e ss i n g Officer. Y o u r honour will appr eciate that i f the A s s e s s i ng Officer is s a t i sf ie d that any u n d i s c l o s e d i n c o m e b e l o n g s to any per son o th er than the per son with r espect So w h o m search was m a d e u/s 132, then only s u c h d o c u m e n t s shall be h a n d e d o v e r to the A s s e s s i n g O f f i c e r h a v i n g j u r i sd ic t io n o v e r such ot he r p er son an d t h e r e af t e r t he A s s e s s i n g O f f i c e r shall p r o c e e d u/s I 58 l i C a ga i n s t s u c h o t h e r p e r s o n. In the p r es e n t case, the d o c u m e n t s su p p l i ed by the A s s e s s i n g Of f ic er * h a v i n g j u ri s d ic ti o n , o v e r Sh. Subhash Verma and Sh. Ind er j i t Singh were supplied without recording s a t i sf ac t i on as r eq u ir e d by se ct i on 15 8 B B and t h e re fo r e t h e a dd i t i o n m a d e on the basis o f s u c h i n f o r m a t i o n has to be del et e d .
A s s u m i n g that t h e r e q u i r e m e n t u/s 15 8 B D w a s f ulfilled, y o u r h o n o u r , still s u ch i n f o r m at i o n or d o c u m e n t s c a n n o t be m a d e the basis for m a k i n g a dd i t i o n u n d e r the b l oc k a s s e s s m e n t in t he a b s e n c e o f a n y seized mat er i a l b e c a u s e secti on 1 5 8R B cl ea rl y m e n t i o n s that u n d i s c l o s e d i n c ome o f the b l o ck p e r i o d shall be c o m p u t e d o n the basis o f
1) E v i d e n c e f ound as a r esult o f s e ar ch ; an d 2 ) S u c h o th er mat er i a l or i n f o r m a t i o n as are ava i l a b l e wi t h the A s s e s s i n g O f f i c e r an d r d a t a b l e to s u c h e v i d e n c e From the abo ve , if is c l e a r that the addi tion made on t he 1st b a s i s can i n d e p e n d e n t l y h o l d the G r o u n d but this is n ot so wi t h the 2 IU| b asis w h i c h ha s to be linked to the I ' 1 basis, i.e. the A s s e s s i n g O f f i c e r s hou l d e i t h er h a v e s o me seized mat er i a l or he s h o u l d h av e or he c a n h av e a n y mat er i a l o r i n f o r m a t i o n but s u p p o r t e d by s e i ze d ma t er i a l . T h e r e f o r e , in b o t h t h e c a s e s e x i s t e n c e o f the s e iz e d ma t er ia l to the effect it m a n d a t o r y . T h e p h r a s e "s u ch e v i d e n c e " refers to c \ a l o n c e f ou n d a s a result o f s ear ch. I f t he re is no s e i ze d ma t er i a l the I ' 1 basis g o e s an d the i n f o r m at i o n o r mater ial a v a i l a b l e wi t h the A s s e s s i n g O f f i c e r looses an y e v i d e n t i a r y val ue. In the p res e nt case t here b e i n g n o e v i d e n c e in t h e f o r m o f s e i z e d mater ial that c oul d r el a t ed to the ma t e r i a l a v a i l a b l e w i t h the A s s e s s i n g O f f i c e r so a s to e n a b l e t he a d d i t i o n o f R s, 6 , 0 1 , 4 0 0 / = & 1 4 , 9 0 , 0 0 0 7 = to s t a n d the test o f law, the d o c u m e n t s s e i z e d f r o m t he p r e m i s e s o f Sh. S u b h a s h V e r m a an d Sh . I n d er jee t S i n g h l oo s e the c v i d e n t a r y v a l u e an d t he r e f o r e the a d d i t i o n o f Rs.20.91,400 b as e d o n s u c h i n f o r m a t i o n o r t h e m a t er i a l is liable to be d e l e t e d w h i c h y o u r h o n o i r is r e q u e s t e d to p l e a s e del ete.
Without prejudice to the above submissions, Badhkal Land deal never m a t e r i a li z ed and t h e r e f o r e no c o m m i s s i o n can be a d d e d to the i n c o m e o f the a s se s s ee .
A s t or a d d i t i o n on a c c o u n t o t a u c t i o n chits, a d d i t i o n h a v i n g b e e n m a d e w i t h o u t r e l y i n g an any se i ze d ma t e r i a l, is l i ab l e to be del et e d. E v e n s t a t e m e n t r e c o r d e d o n 2 6 . 0 3 . 0 3 b e f o r e A D I c a n n o t be m a d e the b as i s f o r a d d i t i o n as a l r e a d y d i s c u s s e d a b o v e . A l s o , a s per s t a t e m e n t o f t h e a s s e s s e e t a k e n on 12.03.99 at P ag e No, 4 & 5, a d d i t i o n c a n not e x c e e d R s . 7 0 , 0 0 0 /= .
L3 I In- i s s ue lias b e e n c a r e f u l l y e x a m i n e d a s a l s o t h e r e l e v a n t s e i z e d r e c o r d s . irsl! a n d f o r e m o s t a d d i t i o n of R s . 6 , 0 1 , 4 0 0 / - is b e i n g c o n s i d e r e d w h i c h c o m p r i s e s of fs--f m . . 0 la w * .
Rs.S,3U,a00/- as a n i n v e s t m e n t ma d e by the a p p e l l a n t a n d a s u m o f Hs.71,400/- whicii c* inp r ise s the co m mi ss i on . R e g a r d i n g t he s u m o f Rs . 7 1 ,400/- it is held that the A O has c o m mi t t e d an e r r o r bv t a k i n g this a m o u n t as u n di s c los e d i n c om e in as m u c h a? the t r a n s a c t i o n h as been e n t e r e d into by the a p p e l l a n t to e a r n p r of i t f rom Rea! Est a t e bu si ne ss an d not as an a ge n t In e a r n c o m m i s s i o n . T h e A O is t h e re fo r e , d ir ec t ed to d el ete a s u m o f Rs . 7 1 , 100/- from (he c o m p u t a t i o n o f u n d is c l o s e d i nc ome of lis.i ,01,400,-. C o m i n g to the b a l a n c e of Us.fi,30,000/- t h e issue has been e x a m i n e d a n d il is a p p a r e n t that d i e a p p e l l a n t ha d e n t e r e d into this t r a n s a c t i o n s al ong wi t h o t h e r s . It ha s h o w e v er , been a r g u e d t h a t the a p p e l l a n t h a d only 1500 sq. y a r d s in t h e e n t i r e plot a n d t h a t t he ad d i t i on s h o u ld not exceed a s u m of Rs. 1,75,500/-. T h i s issue has been c a re f ul l y e x a m i n e d a n d t a k i n g i nto a c c o u n t t he total h o l d i n g a n d the hol di ng o f I he a p p e l l a n t a t 1500 sq. y a r d s the p r o p o r t i o n a t e r eli ef out o f a s u m [if R s . 5.30,000,'- can only be to t he e x t en t o f Rs. 1, 80,5IS/-. In view of the a b o v e the action o f the A O is u p h e l d to the e x t e n t o f Ids t r e a t i n g undi sc l ose d in c o me in the h a n d s o f t h e a p p e l l a n t to t h e e x t e n t o f R s . 3,49,482/-. T h e A O shall r e c o m p u t e t h e i n c ome a c cor di ng l y .
30.4 C o m i n g to the u nd i sc l ose d i n c ome o f Rs. 14,90,000/- a p e r u s a l o f the a s s e s s m e n t o r d e r as well as the plea t a ke n by the Ld. C o u n s e l s h o w s that t he s u m o f Rs. 14,90,000/- c o m p r i s e s of the following:
a) Rs.4,40,000/- a.s u n e x p l a i n e d i n v e s t m e n t in 10 chi ts o f c a r l u c ky d r a w sc he me .
b) Rs.5,25,000/- on a c c o u n t o f 15 i n s t a ll m e n t s of a u c t i o n chits p a i d by Sh. S aini as p e r the d o c u m e n t A-4 f o un d in the case o f o n e Sh. I n d e r j e e t Si ng h.
. . . i t " ) I t s . 5 , 25,000/- o t i a c c o u n t o f 15 i n s t a l l m e n t s of Rs . 3 5, 00 0/ - p e r niontl i as p e r
tlie loose p a p e r s f o u n d in the r e s i d e n c e ot Sh. N . K . M a l h o t r a w h i c h w a s the p r r t o f t h e s e a r c h c a r r i e d o u t in t h e case o f o n e Sh. I n d e r j e e t Singh, 30.5 A p e r u s a l o f t h e f ac t s a n d the r e l e v a n t d o c u m e n t s s h o w s t h a t t h e A O was c o r r e c t in e s t i m a t i n g the u n d i s c l o s e d i n c o m e on a c c o u n t o f t h e i n v e s t m e n t in t h e 10 I chits in t h e " c a r l u c k y d r a w s c h e m e " . S t a n d o f t h e A O is u p h e l d . A n o t h e r plea has been taken that the above determination of income to the extent of Rs . 4,40,1)00/- s h o u l d he ot set o f f by a s u m o f R s . 1,5 0 , (101)/- w h i c h is t h e a m o u n t taken Sh. I n d e r j e e t S i n g h on 10. 02.1996 a n d 11. 02.1096 a n d the d e s c r i p t i o n of w h i c h is c l ea r l y e s t a b l i s h e d in t he seized d o c u m e n t s . T h i s pl e a has b ee n c a r e f u l l y c o n s i d e r e d b u t the s a m e is not a c c e p t a b l e in as m u c h a s t h e r e is no n e x u s b e t w e e n t h e a m o u n t s b o r r o w e d f r o m Sh. I n d e r j e e t S i n g h a n d t h e i n v e s t m e n t in t h e chits.
T h e first i n v e s t m e n t in the chits t a k e s pl a y on 10. 11. 1996 w h e r e a s t he l oa n has b ee n t a k e n n e a r l y 10 m o n t h s ba c k. T h i s pl e a o f the L d . C o u n s e l is n o t a c c e p t a b l e a n d t h e d e t e r m i n a t i o n o f i n c o m e a t Rs . 4, 40,000/- on the a c c o u n t o f ch i ts is u p h e l d . 30.6 C o m i n g to the u n d is c l o s e d i n c o m e of R s . 5,25 , 000/- a n d R s . 5,23,000/- on a c c o u n t o f d o c u m e n t No. A-4 p a g e 3 in t h e c a s e o f I n d e r j e e t S i n g h a n d o n a c c o u n t o f loose p a p e r s o f a u c t i o n p a p e r s f o u n d in the r e s i d e n c e o f Sh. N. K. M a l h o t r a , the r e l e v a n t d o c u m e n t s h av e b ee n p e r u s e d by the u n d e r s i g n e d in o r i g i n a l w h e n p r o d u c e d b y t h e A O on 25. 03.2004. T h e d o c u m e n t s seized f r o m the r e s i d e n c e o f Sh. N.K. M a l h o t r a s h o w s p a r t i c i p a t i o n by t h e a p p e l l a n t in t h e n a m e o f S ai ni E st a te A ge n c y.
30.7 A p e r u s a l o f t he d o c u m e n t A-4 p a ge 3 f o u n d f r o m t h e p r e m i s e s o f Sh. I n d e r j e e t S i ng h d oe s not p o i nt out s pecif icall y to a n y a u c t i o n chi ts p a r t i c i p a t e d by ( h e i i pp' -ll ant. H o w e v e r , ii m u s t b e t a k e n n o t e o f t h a t S h . N . K . M a i hot ra w a s an a s s o c iat o f Sh. I n d e r i e c l S i n g h a n d w a s m a i n t a i n i n g t h e d e ta i l s o f the a u c t i o n c h i t s being p a r t i c i p a t e d b) \ a r i o n s p e r s o n s a n d b e i n g r u a b y Sh. I n t i e r j e e l Si ngl l . 30.8 T h e issue has been c x a n i n c d . As t h e r e is a bs ol ut e l y no m a t e r i a l in s u p p o r t of t h e a d d i t i o n of Rs.5,25,000/- bas ed on d o c u m e n t No. A-4, p a g e 3 o f i n d e r j e et Sins'll Ik ■action o f the A O t r e a t i n g a s u m o f Rs . 5, 25,000 - as u ndi s c lo s e d i n c ome is not a c c e p t a b l e a n d is t h e r e fo r e, del et e d f r om the c o m p u t a t i o n o f un di s c l o s e d income. C o m i n g to the add it i o n o f Rs.5, 25, 000/- on a c c o u n t of t he p a p e r s f o un d at the r e s i de nc e o f Sh. N. K Mu I hoi r a t h e s t a n d o f the A O is u p h e l d a n d a d d i ti o n of Rs . 5, 25 , 1'OO/- is u p he l d. T h e A O shall, h ow e v e r, set-off t h e loans p ic k e d up b y the a p p e l l a n t bv w a y o f chits aga i nst the i nv es t me nt m a d e by t he a p p e l l a n t . This, as p e r a p p c l la n I \s plea, a r e the f unds a va il a bl e to be s et-of f aga i nst t he i u\ esIntents.
31. A D D I T I O N O F RS. 1 2, 00,000/- :
31. 1 IT..- A O in Ins order has staled as under
'7/ is relevant to point out that seized docum ents on the basis o f which the u ndisclosed incom e has been w orked out us above is only w.e.j. fin a n c ia l y ea r 95-96. H ence fo r the rem aining p e rio d o f the block p e r io d fr o m 1.4.90 to 31.3.95 fo r the p e rio d of 6 \ ears no seized docum ent was found. But since. Sh.
M uiian L ai Saini was a p a yed in real estate business in this p e rio d also, the und isclo sed incom e for this p e rio d h estim ated id 2 lues as p e r w ar winch c o n e s to Rs. 12 iacs w hich is Lidded hack to the total incom e o f the assessee. "
3 1.2 flic subm issions o l' tlie ap p ellant through the L d . C ounsel a re jts under:
A--- i . L .w i'ad. \ "The Learned Assessing O fficer erred on fa d s as w ell as in law in adding Rs. 11.00,000/- to the total taxable income o f the assessee as commission income earned during the period 0 1.04.1990 to 31.02.1905.
Y e a r honour, addition on account o f undisclosed com m ission income has been made for the period 0 1.0-1.1990 to 31.03.1995 w h ich com es to 3 year. A d d itio n o f R sl2 ,00,000/= is liable to be deleted straight aw ay. W ithout prejudice to the above submission, addition o f Rs. 12,00,0007= is liable to be deleted being not supported by or based on any seized material. Y o u r honour, as already discussed at Ground N o .9 & 10 above, since no addition can be made or sustained in the block assessment in the absence o f seized material, your honour is requested to please delete the addition o f Rs. 12,00,000/= & oblige. A d hoc additions without reference to any evidence o f material and ju st on the basis o f pure estimate are not liable to be sustained in block assessments in vie w o f submissions made in the grounds respectively and in v ie w o f (he law d c eloped by the decisions o f hon'bie Courts, the details o f w h ich are gt .cn in the paper book "
31.3 Tin issue has been examined and it is held that no such estimation of undisclosed income can be made which is without any evi dence, without any support and wi t hout any rational. The addition o f Rs. 12,00,000/- to the undisclosed income o f the appellant is deleted. Reliance is also placed on (lie decision relied upon by the appellant in the case of CIT vs. Fazir C h a n d Cha ma n Lai 133 T a x m a n 947 (P&H).
i i , . '
32. 1 he Ld. Counsel has also taken a plea that the A O has not computed the income I as per sr tion 15 S B B o f the I.T . Act in as much as the incomes disclosed in the regular returns , w ell as income disc loser! in ll'.e return I tied in response to the im 'v e issued u/s 15S I .'/l 42(1) at the sum o f Rs. 5,00,000 - has not been taken into account. The law in this regard is clear Section 158RB reads as u n d e r:
" 13SRB. Computation o f undisclosed in n wm o f the block period. (is Thu undisclosed incom e o f the [dock, p erio d shall he the aggregate o f the total income o f the previous years falling within the block p erio d computed, in accordance with the p rovision s o f this Act, on the basis o f evidence fo und as a re. ult of search or ree/uisition of hooks of account or other documents and such other materials or information as arc available with the Assessing Officer and relatable to such evidence, as r educed by the aggregate o f the to. a! income, or as the vase m ay be, as increased by the aggregate o f the Ios ses o f such previous years, determined, --
(a, where assessm ents under section 143 or section 144 or section 147 have be. n concluded prio r to the date oj comm encement o f the search or the dale of '•ei.juisition.on the basis ot such assessments; (hi where returns o f incom e have been filed under section 139 o r in response to a notice issued under sub-section (1) of section 142 or section I4R hut assessments hero not been made till the date o f search or rei/iiisilf n. on the ha. is of the income discioscd in such return,s.
(cj where the due date for filing a return o f income has expired, but no return o f incom e has been filed.
(A; o n the basis of entries as recorded in the books of account and other docum ents m aintained in the norma! course on or before the date o f the sta rc h or requisition where such entries result in com putation o f loss fo r any previous y e a r falling in the block period; or (Hi on the basis o f entries as recorded in the books „ o f account a n d other docum ents m aintained in the norm al course on or before the date o f the search or requisition where such incom e does n o t exceed the m axim um am ount not chargeable to tax for any previous y e a r fa llin g in the block p e rio d ;
(ca) where the due date for fd in g a return o f incom e has expired , but no return o f incom e has been filed , as nil, in cases not fa llin g under clause (c);
(d) w here the previous y ea r has not ended or the date o f filin g the return o f incom e under suh-scclion (!) o f section 130 has not expired, on the basis o f entries relating to such incom e or transactions as recorded in the books o f account a n d other docum ents m aintained in the norm al course on or before the date of the search or requisition relating to such previous years,
(e) where any order o f settlem ent has been made under su b se c tio n (4) of section 245D, on the basis o f such order;
(f) where an assessm ent o f undisclosed income had been m ade earlier under clause (c) o f section 158BC, on the basis o f such assessm ent.
E xp la n a tio n .-F o r the purposes o f determ ination o f undisclosed incom e,- (a/ the total incom e o r loss o f each previous year shall, fo r the purp o se o f aggregation he taken as the total incom e or loss com puted in accordance with the provisions of this act without giving effect to set o f f o f brought fo rw a rd losses under C hapter I'l nr unabsurhed depreciation under su b - section (2) o f section 32;
P rovided that in com puting deductions w ider Chapter CPA for the purposes o f the sa id aggregation, effect shall he given to set o f f o f brought forw ard ^ . I mJ f /* e tw lot res under Chapter VI or unabsorhed depreciation under sub-section (2) o f section 32;
lb ■ c j a J in n , returned incom e and total incom e assessed fo r each o f the previous years fa d ini; within the block p e rio d shat! be incom e determ ined he; ire allow ing deduction o f salary, interest, com m ission, bonus or rem uneration by w hatever nam e called to any p a rtn er not being a working partner:
P ro vid ed that undisclosed incom e o f the firm so determ ined sh a ll not be chargeable to tax in the hands o f the partners, w hether on allocation or on account o f enhancem ent.
(c) assessm ent under section 143 includes determ ination o f incom e under s u b section (I) o r s u b s e c tio n (ID) o f section 143.
(2y In com puting the undisclosed incom e o f the block period, the p rovisions of sections 63. 69. 694. 69 B am i 69C shall, so far as m ay be. apply and references to 'tinaneial w a r " in those sections sh a ll be co nstrued as references to the. relevant previous y e a r fa d in g in the block p e r io d including the p revious year ending with the dale o f search or o f the requisition. (3) The inn den of p ro v in g to the satisfaction o f the A ssessing O fficer that any undisclosed incom e had already been disclosed in any return o f incom e filed by die assessee before the com m encem ent o f search or o f the requisition, as the case m ay be. sh a d be on the assessee..
(4) Tor the p urpose o f assessm ent under this Chapter, losses brought fo rw a r d fr o m the previous y e a r under C hapter VI or unabsorhed depreciation under sub-seetion (2) o f section 32 sh a d nut be set o f f against the undisclosed incom e determ ined in tne block assessm ent under this Chapter, but m ay be carried fo r w a r d fo r being set o f f in the regular assessm ents. "
r ^ '.1 T h e issue lias been e x a m i n e d a n d a p e r u s a l o f t h e a s s e s s m e n t o r d e r s h o w s t h a t t h e AO lias c o m p u t e the total i n c o m e a t Rs . 56, 9I , 23 0/ - b u t lias n o t a c c o u n t e d for the r e t u r n o f b lock per io d at its.5,00, U00/-. T h e A O is d i r e c t e d to r e c o m p u t e the und i s c l os e d in c ome a f t e r e x a m i n i n g t he r e c o r d s in co n n e ct i on >vifh r e t u r n filed in r es p o n se to notice u/s 15S lit a n d set of f I lie undi sc l o se d i n c o m e d e c l a r e d in the r e t u r n o f b lock a c c o r d i ng ly . R e g a r d i n g the plea t h a t u ndi s c los e d i n c o me s h a d a l r e a d y been disclosed in t he r e g u l a r r e t u r n s o f i n c o m e filed, t h e Ld . C ou ns e l has invited a t t e n t i o n to t h e s t a t e m e n t o f the a p p e l l a n t r e c o r d e d on 15.02.1999 w h e r ei n in r eply to q u e s t i on No.2 it has ca t e g or i c al ly been s t a le d by the a p p e l l a n t t h a t all t he t r a n s a c t i o n s wh ic h has been e n t e r e d into by hi m a r e r e c o r d e d in t h e p a p e r s f o u n d a n d seized a n d t h a t t h e r e a r e no o t h e r a c c o u n t s whi ch a r e b ei ng k e p t by him.
32.2 T h e issue lias been e x a m i n e d a n d it is a p p a r e n t f r o m the facts (hut the a p p e l l a n t is ent it l e d to t h e set of f of i n c omes d e c l a r e d in t h e r e t u r n s a s p e r section I 5 8 B B (i)(b) r e a d w i t h section I58BB( 3) . T h e A O shall r e c o m p u t e t h e undi sc l o se d inc ome a c co r d i ng ly .
33. T h e Ld. C o un s e l has also ta ken the g r o u n d t ha t t h e A O e r r e d in not al lowing e x p e n d i t u r e i n c u r r e d on the un di s c l o s e d i nc omes d e t e r m i n e d by t h e AO .
33.1 A p e r u s a l o f the a s s e s s m e nt o r d e r shows t h a t t h e A O h a s d e a l t vvith this m a t t e r as t i n d e r :
" It w a s f u r t h e r a r g u e d by Sh. M. L . Saini t h a t r e n t , s a l a r y , c o n v e y a n c e exp., el ectricity, te l e p ho n e, office expenses, tea, cold d r i n k s etc. m a y be al lowed. In this co n ne ct i on it is s t a t e d that these ex pe ns e s h a v e a l r e a d y Jaeen al lowed
--1 h t . i A * .. *. / . :'V r i i. ■■ in i lie a s s e s s m e n t as c l a i m e d In S h . M . L . S a i n i in his r e t u r n s u f i n c o m e filed li n m t i m e to t i m e. "
33.2 T; - L d, ( 'utilise! has r elied u p o n the d ec i si on ol t h e M o n ' b l e . S u p r e m e t mirl in t h e e n - e o f ' A i t a u d G ui l d e r s vs. l i t ) w h e r e i n S L P filed b y ( he d e p a r t m e n t wa s d i s m i s s e d by t h e H o n 'hle S u p r e m e C o u r t r e g a r d i n g t h e d i r e c t i o n s o f t h e a p p e l l a n t T r i b u n a l d i r e c t i n g the A O to tax only 8 % o f t h e u n a c c o u n t e d on m o n e y r ec e iv e d in s t e a d e l 'f u l l y t a x i n g it iri (lie a b s e n c e o f a n y e vi de nc e. 33.3 T h e iss ue h a s b e e n e x a m i n e d a n d it is h e l d t h a t t h e a p p e l l a n t is e n t i t l e d to a reasonable se t off of expenditu re against the incomes earned nam ely the commission income. K e e p i n g in xiew t h e v a r i o u s f acts a n d c i r c u m s t a n c e s o f the ca se t h e \(> is d i r e c t e d In allow e x p e n d i t u r e to the e x t e n t o f 4 % on t h e i n c ome e a r n e d ft out t h e c o m m i s s i o n a n d p r of i t u f r e a l e s t a t e b us i n e s s . T h e A O shall recom pute the income accordingly.
34. T h e last c l a i m o f t h e a p p e l l a n t is t ha t t h e A O Inis e r r e d in no t gi vi ng r e l i ef as c l ai m e d v ide r ep l i es d a t e d 2 " . 03.2001 a n d 20.03.20111. it h a s b e e n a r g u e d t h a t the AC) h a s e r r e d in not a l l o w in g t he b ene f it o f u n d i s c l o s e d i n c o m e s a g a i n s t the u n di s c l o s e d i n v e s t m e n t s a n d lias t h e r e f o r e , m a d e d o u b l e a d d i t i o n . 34.1 T h e i s s ue iias been e x a m i n e d . T h e c l ai m s m a d e in t h e le t t e r s b e f o r e the A O h a s b ee n l a r e f u l h p e r u s e d . F r o m t he facts, the c l a i m o f t h e a p p e l l a n t a p p e a r s to be b o t h r e a s o n a b l e a n d logical. T h e A O shall, t h e r e f o r e , w h i l e r e c o m p u t i n g the u n d i s c l o s e d i n c o m e of t h e b l oc k p e r i o d give n e c e s s a r y set-olT o f t h e i n c o m e s a ga i n st the i n v e s t m e n t s . H o w e v e r , w h e r e v e r s u c h specific s e t - o f f ha s a l r e a d y been given in this o r d e r t he A O shall r e s t r i c t this b ene f it a c c o r d i n g l y , -v (C.1) At the time of hearing before us, Revenue was represented by Smt. Parm ita M. Biswas, Commissioner of Income Tax (Departmental Representative)["CIT(DR)" for short']. However, none was present from the assessee's side. In the absence of any representation from assessee's side, at the time of hearing before us, we have heard the Ld. CIT(DR), who relied upon the order of the Assessing Officer and the aforesaid impugned order dated 31.03.2004 of the Ld. CIT(A). After perusal of the m aterials on record, including the order of the AO and the aforesaid impugned order dated 31.03.2004 of the Ld. CIT(A), we find that the Ld. CIT(A) has passed speaking order on merits. Relevant portion of the impugned order of the Ld. CIT(A) has already been reproduced in foregoing paragraph [C] of this order. We find th at the Ld. CIT(A) has given detailed reasons for his decision on m erits in the aforesaid impugned appellate order dated 31.03.2004 of Ld. CIT(A). During appellate proceedings in Income Tax Appellate Tribunal no material has been brought for our consideration to persuade u s to take a view different from the view taken by the Ld. CIT(A) in the impugned order on merit. After hearing the Ld. CIT( DR) and after perusal of m aterials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order dated 31.03.2004. of Ld. CIT(A). [C.1.1] In view of the foregoing discussion, the appeal filed by assessee is dismissed. Before we part; we explicitly clarify that the assessee will be at liberty to approach ITAT for restoration of the appeal in accordance with Proviso to Rule 24 of Income Tax (Appellate Tribunal), Rules, 1963. If the assessee does approach ITAT for restoration of the appeals filed by the assessee in ITAT, the matter will be considered in accordance with law having regard to the facts and circumstances.
(D) Now, we take up Revenue's appeal in ITA No. 207/Del/2004 . In this appeal, Revenue has raised following grounds of appeal:-
"On the fa c ts a n d circum stances o f the case, w h e th e r the C om m issioner o f Income Tax (Appeals) w a s right in law:
1. In deleting Rs. 4 2 ,0 0 0 / - on account o f profit on sale o f land.
2. In deleting Rs. 3 0 ,0 0 0 /- on account o f com m issioner on sale o f plot.
3. In deleting Rs. 2 0 ,9 3 6 /- on account o f C om m ission on sale o f plot.
4. In deleting Rs. 2 0 ,0 0 0 /- on account o f u ndisclosed profit on sale o f land
5. In deleting Rs. 6 4 ,1 6 6 on account o f profit on sale o f land
6. In deleting Rs. 5 0 ,0 0 0 / - on account o f u ndisclosed income on sale o f land.
7. In deleting Rs. 5 0 ,0 0 0 / - on account o f u ndisclosed income on sale o f land.
8. In deleting Rs. 4 3 ,7 5 0 / - on account o f u ndisclosed com m ission income.
9. In deleting Rs. 1 1 ,4 5 4 /- on account o f u ndisclosed com m ission.
10. In deleting Rs. 2 3 3 5 0 0 / - on account o f u n d isclo sed income on sale o f land.
11. In deleting Rs. 2 2 ,0 0 0 /- on account o f u ndisclosed com m ission income.
12. In deleting Rs. 2 5 1 9 1 8 / - on account o f u n d isclo sed profit on sale o f land.
13. In deleting Rs. 5 2 5 0 0 0 / - on account o f u n d isclo sed in ve stm e n t in auction chit.
14. In deleting Rs. 1 2 0 0 0 0 0 on account o f u ndisclosed com m ission incom e fo r the period fro m 01-04-90 to 3 1 02-95.
15. In allow ing a n am o u n t o f 4% o f the total incom e a s expenditure to be se t o ff against th e incom e earned.
16. In directing the A s s e s s in g Officer to give n ece ssa ry se t o ff o f the incom e a g a in st the in ve stm e n t w hile recom puting the u n d isclo sed incom e o f the block period.
That th e appellant craves fo r the p erm issio n to add, delete or a m e n d th e grounds o f appeal before or at the tim e o f hearing o f appeal. "
(E) At the outset, it was brought to our notice by learned CIT(DR) at the time of hearing, th at tax effect in this appeal of Revenue is below Rs. 50,00,000./-. Vide recent CBDT Circular No.17/2019 dated 08.08.2019 read with earlier CBDT Circular No. 3 of 2018, dated 11.07.2018, minimum threshold limit of tax effect of filing of appeals by Revenue in Income Tax Appellate Tribunal ("ITAT", for short) has been enhanced to Rs. 50,00,000/-. In a subsequent clarification issued by CBDT vide F.No. 279/M isc/M -93/2018-ITJ, dated 2 0 /0 8 /2 0 1 9 , it has been clarified by CBDT th at the aforesaid revised monetary limit is also applicable to all pending appeals in ITAT. Therefore, in view of the foregoing, we are of the view th at this appeal filed by Revenue is not m aintainable.. Accordingly, this appeal is dismissed being not pressed, and also not m aintainable, having regard to aforesaid CBDT Circular No. 17/2019 dated 08.08.2019 read with aforesaid CBDT Circular No. 3 of 2018 in the light of aforesaid clarification dated 2 0 /0 8 /2 0 1 9 .
[E.1]. Before leaving, we clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal U/s 254(2) of Income Tax Act, 1961 seeking restoration of the appeal if it is found that this appeal of Revenue is not covered by aforesaid CBDT Circulars dated 08.08.2019 and 11.07.2018. [G]. In the result, the appeals by Assessee and Revenue are, both, dismissed. Our decision in both these appeals was announced in the Open Court after conclusion of hearing. Now, this detailed order in writing is pronounced in Open Court on 2 2 /1 0 /1 9 .
S d/- S d/-
(AMIT SHUKLA) (ANADEE NATH MISSHRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 2 2 /1 0 /1 9
(SH / Pooja)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Draft dictated 07.10.2019
Draft placed before author
Approved Draft comes to the Sr.PS/PS
Order signed and pronounced on
File sent to the Bench Clerk
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.
Date of uploading on the website .10.2019